Will Open Source Software Come To Hedge Fund Industry

Pavel over at HFS wrote an interesting piece about Open Source software and the Hedge Fund Industry, here are some extracts I found interesting:

Why do hedge fund managers prefer paying annual license fees, support fees, one time engineering fees, integration fees for the proprietary systems that suck them into “long term relationship” with their software vendor instead of easy to start and easy to end “one night stands” with open source software projects. Just to get on board and migrate existing operations data to the new software system takes humongous amount of time and, off course, money - that eventually lead to “marrying” software vendor “for better or for worse”.

The answer here most likely lies in the specifics of the hedge fund business, where investing strategies are managers’ bread and butter and are guarded better than detainees in Guantanamo. Hedge fund managers are very sensitive when it comes to giving someone access to their investing strategies or even worse - making them public.

One can argue that its all good, but how about support, reliability and more importantly timeliness of those two. At least having a software vendor there is someone who can add a newly desired feature (that is very important) and at least there is some one to call when the system goes down and this someone is obliged to fix it for you in a matter of days. The answer to that is - if the open software would become popular in the hedge fund business there would be tons and tons of the individual freelance developers as well as dedicated software companies who would be specializing in customization and improvement of it. I believe you would be able to get and so much desired new features and support and you also will be able to shop for these services. Eventually you as a consumer will win.

If open source software has brought so much positive to consumers in other software industries (think Mozilla Firefox, Eclipse) why it can not do well in hedge fund software field???

At Opalesque Solutions, we are fully committed to bringing the concept of Open Source to the hedge funds industry. We’ve built all our web applications on open source technology, which is what allows us to offer them to our clients at rock-bottom prices while being able to dedicated our resources to customer support. We are bringing change to the industry, one hedge fund at a time.