Every investment manager, including systematic managers, must focus on protecting their own financial strategy models. After all, this infrastructure runs your code, sends orders to brokers and banks, and connects to various necessary service providers, so implementing the right IT infrastructure is crucial.
To effectively safeguard your strategy model’s intellectual property (IP), it's essential to organise the infrastructure so that your code remains under your control at all times. Here’s how it can be done.
Building a systematic investment strategy model is a complex task that requires multiple components. In a way, it is similar to constructing a car; while the engine is vital, the chassis, electronics, suspension, among other parts, are equally important for optimal performance.
Just as the engine differentiates a car, however, so does the software that generates buying and selling orders: it is what sets your strategy apart. However, this core software—often referred to as the ‘engine’—usually constitutes less than 10% of the total software required to run a financial strategy model. Indeed, in many cases, the core model may account for just 3% or even less, depending on its complexity.
Assuming the essential part of your strategy model represents 5%, the remaining 95% should ideally be sourced from third-party solutions rather than developed and maintained in-house.
Creating an API (Application Programming Interface) between your core financial strategy model and the other software components will allow you to maintain control. In fact, by managing these elements in distinct locations with different teams, you can maximise efficiency and security.
At Wakett, we offer the flexibility of developing a tailor-made solution that empowers you to retain control over your 5% core system while entrusting us with the 95% that is typically costly and time-consuming for small and medium-sized enterprises (SMEs) to create.
So, to recap, the best way to protect the IP of your core financial strategy model is to keep that code separate from the other components. This allows for communication between systems to exchange the necessary data without exposing more information than is required.
Are you ready to make this a reality for your team? If so, get in touch with us today to explore how you can improve efficiency while effectively protecting your financial strategy model.