In March 2015, aiming to capitalize on requirements in the alternative-investment marketplace for greater operational efficiency and transparency, D.E. Shaw Group announced the launch of Arcesium, an independent spin-off to sell posttrade technology that the hedge fund firm had developed. Gaurav Suri, who had been New Yorkbased D.E. Shaws head of information technology and software development and is now Arcesiums CEO, says the strategy began to take shape around 2008. Christopher Zaback, formerly of Sandelman Partners and Moore Capital Management, had joined D.E. Shaw as CFO, and the firm took a fresh look at how to innovate in its middle and back offices. The answer was to build an entirely new platform to deliver what Suri calls one version of the truth, thereby avoiding time-consuming reconfigurations of data between back and front offices. Weve built a comprehensive and robust exception-driven platform, so computers do most of the heavy-lifting, leaving humans free for higher-order analysis, says Suri, 45, who joined D.E. Shaw in 1996 from Bell Laboratories. The platform launched in 2012, and D.E. Shaw reportedly cut both its operating costs and the time it took to close its books by more than 50 percent. Commercialization was a logical next step. Suri says the intention both physically and technologically was to ensure that our business operates independently. Arcesium runs on Amazon Web Services rather than hosting in-house and dealing with maintenance, upgrades and other hassles that can be outsourced. Having D.E. Shaw as majority owner and biggest customer Blackstone Alternative Asset Management was the other initial client and took an ownership stake provides a solid foundation. Suri says Arcesium also benefited from good timing, as growing acceptance of cloud-based services coincided with regulation-driven needs for transparency and disclosure. We are exactly at the intersection of these two trends, he says.
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