December 19, 2005 - Hedge fund administrator Dundee Leeds Management Services has tapped Paladyne Systems of New York to broaden its offerings as an application service provider (ASP) for alternative investment managers.

Those services, aimed at attracting mid- to large-tier hedge funds, include Paladyne Portfolio Master for order management and allocation, portfolio management and performance tracking; Security Master, a repository and distribution engine with real-time updates and corporate action alerts; Price Master, which automates collection, storage and analysis of prices and market data from third-party sources; Analytics Master, which provides portfolio analytics, data aggregation and custom reporting tools; and Client Master, which handles client relationship management and reporting.

For portfolio accounting, Paladyne is integrating the Geneva package from San Francisco's Advent Software. Geneva has about 60 hedge fund administrator and manager clients, but all are directly licensing the product. The tie-in with Paladyne provides ASP distribution--a form of outsourced delivery--for the first time.

"As today's hedge funds become more complex and face increasing demands from investors and regulators, our hosted platform provides a low-cost solution to meeting these business requirements and allows our clients to scale in size and complexity with no need for additional infrastructure," said Paladyne CEO Sameer Shalaby.

The strategic alliance with Paladyne is not cost-driven, according to Dundee Leeds officials, but rather enables the boutique firm, with $23 billion in assets under administration, to compete more evenly against larger rivals such as Citco, Fortis, HSBC, Bank of New York and State Street Corp. Dundee Leeds will retain about a dozen operations personnel in its Montreal office, but they will focus on exception processing.

Hedge funds are increasingly looking for support services from prime brokerages and administrators beyond basic post-trade processing. Simply striking a net asset value for a fund is no longer sufficient.

Most of Dundee Leeds' IT development has been in-house, though the firm used a licensed version of Advent's Axys platform, which is designed for small to mid-tier hedge funds and administrators. The average Dundee Leeds hedge fund client has about $100 million under management, and the administrator views Paladyne as a lever to reach top-tier funds.

"We are looking to expand our services to funds with more complex outsourcing needs," says Christine Egan, Dundee Leeds' head of international business development in New York, who joined earlier this year from HSBC. Dundee Leeds has signed two hedge fund managers for the new Paladyne offering; it has over 100 under its belt.

Shalaby, founder and former CEO of Cogency Software, a hedge fund data aggregation and reporting software shop, co-founded Paladyne in July. Its technology underpinnings consist of assets acquired from a large, multistrategy hedge fund; the fund's identity hasn't been disclosed, but sources close to the self-funded Paladyne say it was Alexandra Investment Management, a multi-billion-dollar New York institution that specializes in derivatives and capital-structure arbitrage. Paladyne's chief technology officer and co-owner Sol Zlotchenko was head of development at Alexandra.