Cyber Security, Social Media and Fintech General Trends for the Fund Industry

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1 Cyber Security, Social Media and Fintech General Trends for the Fund Industry How Technology and Social Media are Disrupting and Opening new Opportunities for the Fund Industry Dinis Guarda CEO and Founder HedgeThink.com IntelligentHQ.com ForexThink.com

2 Finance a new disruptive Fintech world Finance Graphic by Kostas Peric

3 The new disruptive fast changing Fintech world

4 Hedge fund industry is still in growth mode and getting more exposure than ever, therefore will have to focus on branding, social media and fintech to answer to their growth; Cyber-security is going to be a critical element in what regards hedge fund fintech concerns; Branding is critical for firms and the best ones or new startups will need increasing to look at digital presence and branding; Continued activity in long/short, event-driven, pairs trading, global macro, some pick-up in merger arbitrage with algo trading multiasset support and insights;

5 Continued growth in compliance, interest in Spitzer investigations/sec regulations and how to monitor news and regulations. Evolution to two tiers of hedge funds: start-up versus established funds and the nuances and competition, support dynamics; Academic research increasing in the are of AI for algorithm trading and funds. Some of this research increasingly being applied by companies; Social media and special Twitter emerging as a real time data source for researching market sentiment. Social media and Fintech are affecting the industry changing and mutation. There is a fast moving landscape offering new opportunities. Some more holistic ideas:

6 Global 360 degrees approach and increase use and leverage of social media and fintech. Disintermediation: advancements in correlation tech and software engines and AI and machine learning will help institutional investors identify investment opportunities on their own or lead to a squeeze on HFs to be more competitive on fees: Dissemination: due to increase advances and developments in big data / BI analytics, capital markets and global market tech development, more investors and alternative investors will have better access to data. Multiple data sources will be more easily combined and historical and real time: Increasing automation of trading and researching repetitive processes: primarily affecting mid- back-office but going through all investors strategy cycle.

7 In short, software is eating the world. (...) we are in the middle of a dramatic and broad technological and economic shift in which software companies are poised to take over large swathes of the economy. Marc Andreessen, WSJ

8 The financial services industry has been visibly transformed by software over the last 30 years. Practically every financial transaction, from someone buying a cup of coffee to someone trading a trillion dollars of credit default derivatives, is done in software. And many of the leading innovators in financial services are software companies ( ). Marc Andreesen, WSJ

9 Every individual = Media + Financial Company Every Business = Media Publishing + Financial Innovation Company!

10 trader / investor I want to trade / invest

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12 ( ) the world lacks enough leaders who understand the potential for new, technology-driven solutions for global problems. ( ) But even there, an understanding of tech s potential is disturbingly uneven. Some companies thrive by embracing new methods of marketing, managing, developing products, and engaging with society. David Kirkpatrick, Forbes

13 Perhaps the biggest change that online trading technology has brought about is to democratise access to the markets, allowing individuals to make their own trades without the costs and time lag that were associated with the old way of doing this

14 Produces premium content that bridges The funds industry, are facing a new world where investors now have the option of placing their own trades rather than trusting in the performance of professional investors a trust that has been eroded somewhat in the wake of the financial crisis of 2008.

15 Produces premium content that bridges The rapid evolution of trading platforms has also provided new technologies for professional traders, too, and this process has also provided new alternatives in terms of liquidity solutions and ways to connect with the markets in particular, high-end protocols such as DMA (Direct Market Access) and STP (Straight Through Processing).

16 When social media first came along, it was strongly resisted by the financial services industry, and particularly the traditionally ultra-secretive world of hedge funds. The ideals of transparency and open sharing of information that it promoted seemed to be anathema to the behind-closed-doors world of alternative investments.

17 The Damascus moment with social media came with the so-called hack crash of April 2013, when a hoax tweet coming from the Associated Press Twitter account claimed that there had been an explosion at the White House. Markets went into a tailspin, with billions of dollars being wiped off the Dow Jones index, only for the markets to recover only a few minutes later when the tweet was revealed as a hoax, perpetrated by hackers. Nonetheless, the damage was done, and traders realised that they could no longer afford to ignore social media.

18 A 2014 study by Agecroft Partners has identified trends in the increased use of social media by hedge funds to enhance their marketing campaigns. The main network, from a hedge fund perspective, is LinkedIn, used by approximately 90 per cent of the hedge funds that have more than USD100 million in assets under management. This followed, somewhat distantly, by Twitter.

19 1. 61% of alternative funds with less than $100 million AUM have no marketing, PR, content or PR in place. 2. As the Hedge Fund industry grows and creates more footprint its brands need increased visibility. It is fundamental to create both an asset for their business and marketing efforts and a platform with a profile of digital content / social media, that can augment their business and audience reach. 3. There is as well a need to create platforms to support professionals working with Hedge Funds, and alternative funds. 4. They need to work as startups in this new world of technology and social media

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22 10 Trends to look: 1. Peer to peer investment, trading and funding are going to be more powerful for Hedge Funds and the Investment industry; 2. Retail Vs. Institutional investment / trading communities; 3. Proliferation of trading and investing niche influence communities; 4. The advent of digital currencies and global software money; 5. Social Media disruption, platforms and social technologies;

23 10 Trends to look: 1. Increase of mobile and App platforms adapted with local, regional, national context and technologies; 2. Technical digital semantic platforms based in interest sentiment and algorithms for investors and traders; 3. The way we share value associated with the concept of how (big) data and offshore, open government regulations; 4. The way open data and innovation are transforming countries, emergent markets, laws and business strategies; 5. The idea of thought leadership groups supporting each other and creating premium digital organisations, cities.

24 Thank you Dinis HedgeThink.com