Wells Fargo to provide quant hedge funds with revamped trading platform

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Wells Fargo has partnered with FinTech firm HPR to provide a new-look electronic trading platform for quantitative hedge funds clients.

The partnership will see the bank’s quantitative prime services division adopt HPR’s Unimus platform, which will include the use of its ultra-low latency direct market access (DMA) and pre-trade risk management solutions, to provide Wells Fargo’s hedge fund clients with custom trading solutions.

“HPR’s scale service architecture provides the flexibility to access solutions across the latency spectrum,” said Anthony Amicangioli, founder and CEO, HPR. “Wells Fargo understands the future of electronic trading and we are excited to partner with them to provide highly differentiated services on our unified Platform-as-a-Service (PaaS) architecture.”

The new trading platform is the latest enhancement Wells Fargo has made to its prime brokerage division, such as the roll out of new capabilities to its agency outsourced trading desk, following its launch in June last year.

“Through our collaborative partnership with HPR, our clients will have the opportunity to deploy market-aware network hardware, advanced data delivery systems, latency management solutions and trade surveillance platforms,” said John Leone, managing director and head of quantitative strategy at Wells Fargo Corporate and Investment Banking.

“HPR is the gold standard in risk gateways and at-trade risk management, and we’re pleased that HPR will soon launch an additional suite of products which will raise all components of the trading stack.”

UBS has offered HPR’s technology through its quantitative prime brokerage since 2013, and has become a core component to the Swiss bank’s quant solutions strategy.

Over the past few years, prime brokers have been able to grow their business by concentrating on the burgeoning quantitative hedge fund sector, of which the largest and most diverse prime brokerage have been able to succeed. 

Quant hedge funds, such as the likes of AQR Capital, D.E. Shaw, Renaissance Technologies and Two Sigma, rely on algorithms and automated trading solutions, in addition to artificial intelligence and machine learning, for their investment strategies.

However, quant hedge funds have been among some of the hardest hit by the volatility caused by the COVID-19 pandemic. According to research from Refinitiv, 72% of quant investors were hurt by the pandemic, as machine-learning models and algorithms based on historical data suffered as linkages broke down and the complexity of their inputs increased significantly.