How Tower Research’s SVA Model Unlocks Quant Talent Leverage

Paul Allen

20 Nov 2025 • 7 min read

Wall Street’s quantitative trading race has evolved beyond hedge funds. Tower Research Capital, with offices in 12 cities worldwide, quietly pioneers a new model to attract elite quants through a hedge-fund style twist — the Software Vendor Agreement (SVA) launched in 2017.

Unlike traditional multistrategy hedge funds that rely on separately managed accounts (SMAs) to onboard external portfolio managers, Tower offers quant teams operational independence and IP ownership while plugging directly into its vast capital and technology platform. This deep integration accelerates profitable trading without the friction of building infrastructure from scratch.

It’s more than hiring; it’s creating a plug-and-play ecosystem that aligns incentives and leverages ownership and control on the quant’s side, and scale and resources on Tower’s side. Prop firms embracing hedge fund structures is altering talent acquisition dynamics.

“De-risk by having all structural elements set up day one lets quants focus exclusively on alpha,” said an industry expert familiar with SVAs.

Why Traditional Hiring Misses the Strategic Constraint

Conventional wisdom treats quant recruiting as a talent hunt or cost center management. Firms either hire internally or invest heavily in infrastructure for new teams. SMAs let hedge funds outsource fund-raising and operations, but external managers bear regulatory burdens and often cede IP.

Tower’s SVA model challenges this by repositioning the constraint. It removes infrastructure and capital acquisition as blockers, enabling quants to scale without sacrificing control. Instead of managing client funds with fiduciary duties, external teams license their algorithms to Tower who deploys its capital. This shifts regulatory and operational risk away from quants, enabling faster innovation and cash flow.

Compare this with hedge funds like Millennium or Schonfeld, which grew SMA assets 27% last year to $315 billion but require external PMs to juggle fund-raising and regulatory compliance.

Similarly, prop shops like Jane Street and Citadel Securities have expanded into medium-frequency quant strategies but typically operate internally. Tower crosses this boundary with a system tailored for collaboration.

Internally, Tower already runs like a multistrategy hedge fund with teams such as Latour Trading and Limestone owning distinct PNL responsibility, further blending prop trading with hedge fund structures (IP ownership is a key lever).

The Mechanics of Tower’s Software Vendor Agreements

SVAs grant external quant teams access to Tower’s global exchanges and proprietary tech stack while allowing them to retain intellectual property and brand autonomy. Profit-sharing aligns incentives without imposing traditional fund governance overhead.

The alternative—building from ground zero—can cost tens of millions and years before turning a profit. SVAs reduce the time-to-market by offloading capital, infrastructure, and compliance burdens to Tower.

Tower’s approach resembles a commercial services contract rather than an investment advisory relationship, differentiating it from SMAs legally and operationally. This geometry creates a new talent funnel traditionally overlooked by prop trading firms.

It's a rare blend of autonomy and support that makes SVAs scalable: Teams like LQT Technologies, founded by ex-Jump Trading quant Pierre Laffitte in London, are early beneficiaries. Others include Ansatz Capital and Differential Research, each bringing diverse strategies into Tower’s ecosystem.

Unlike hedge funds focused solely on asset-gathering or proprietary trading, Tower engineers leverage by hosting and scaling talent over owned capital, a subtle but powerful pivot.

Implications for the Future of Quant Trading and Talent

The core constraint in quant trading has shifted from idea generation to resource and infrastructure deployment. By licensing algorithms via SVAs, quants skip capital raises, overhead costs, and compliance complexity, focusing purely on strategy refinement.

This model unlocks previously inaccessible investors and innovators, creating a modular trading ecosystem optimized for rapid iteration and compounding performance.

Other prop firms and hedge funds must consider similar hybrid contracts to capture outsized talent pools without diluting control. The Tower move signals a systemic reframing of talent sourcing as a software-services alignment rather than traditional hiring.

Regions with dense financial hubs like New York and London will accelerate adoption, but the model can scale to emerging markets hungry for global market access.

Operators must watch this inflection: ownership and operational independence combined with instant access to capital and technology stack are the new leverage points.

Investors and quant teams ignoring this emerging model risk falling behind as prop and hedge fund lines blur into hybrid platforms optimizing for rapid, decentralized alpha generation.

In a landscape where operational independence and scalable infrastructure are key, platforms like Copla help teams streamline and document their processes effectively. For quant teams and hybrid hedge fund structures looking to lock in repeatable workflow efficiencies without sacrificing control, Copla offers a practical way to establish standard operating procedures and keep innovation aligned. Learn more about Copla →

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Frequently Asked Questions

What is a Software Vendor Agreement (SVA) in quantitative trading?

An SVA is a contract model that allows quant teams to license their algorithms and retain intellectual property while accessing capital and infrastructure from firms like Tower Research. Launched in 2017, it shifts operational and regulatory risk away from quants, enabling faster iteration and scaling.

How does Tower Research's SVA model benefit quantitative trading teams?

Tower's SVA model provides quant teams with operational independence, IP ownership, and direct access to capital and proprietary technology, reducing time-to-market and infrastructure costs that can run into tens of millions.

Why do traditional hedge fund hiring models fall short for quantitative teams?

Traditional models rely on separately managed accounts that require portfolio managers to handle fundraising and regulatory burdens, often sacrificing intellectual property. This constrains growth and innovation compared to models like SVA that eliminate these blockers.

How much did hedge funds like Millennium and Schonfeld grow their SMA assets recently?

Hedge funds such as Millennium and Schonfeld grew their separately managed account (SMA) assets by 27% last year to reach $315 billion, even though these models impose regulatory and operational demands on external managers.

What kind of trading strategies do prop firms like Jane Street and Citadel Securities typically focus on?

Prop firms like Jane Street and Citadel Securities usually operate internally and have expanded into medium-frequency quantitative strategies but do not typically offer operational independence or external collaboration models like SVAs.

What makes Tower Research's ecosystem unique compared to other prop trading firms?

Tower creates a plug-and-play ecosystem blending autonomy and support by hosting external quant teams via SVAs, allowing them control and ownership while scaling talent over owned capital, unlike traditional prop shops solely focused on internal trading.

How does licensing algorithms through SVAs shift the core constraints in quant trading?

Licensing algorithms via SVAs removes capital raising, overhead, and compliance from quant teams, letting them focus on refining strategies and accelerating innovation with reduced regulatory risk, thereby overcoming infrastructure constraints.

Which regions are expected to adopt the SVA model most rapidly?

Financial hubs like New York and London are expected to accelerate adoption of the SVA model, but it can also scale to emerging markets seeking global access to capital and technology platforms.