Open-source software (OSS) is characterized by licensing arrangements wherein copyright holders grant licensees the ability to freely change and distribute that software, subject to certain requirements or restrictions. These obligations may be minimal, as is the case with permissive licenses, or onerous, as is the case with so-called “copyleft” licenses. OSS exists for virtually any application, including artificial intelligence, database management and system security. Its ubiquity means that fund managers can leverage OSS for all segments of their businesses. This article, the first in a three-part series, discusses the basics of OSS, actions governments are taking to support it, relevant regulatory guidance and ways OSS is being used by fund managers. The second article will analyze the benefits of OSS, as well as the disadvantages and risks that it presents. The third article will evaluate actions fund managers can take to mitigate OSS risks, including policies, procedures and controls to adopt; ways to deal with third-party vendors; and due diligence. See our three-part series on big data: “Its Acquisition and Proper Use
” (Jan. 11, 2018); “MNPI, Web Scraping and Data Quality
” (Jan. 18, 2018); and “Privacy Concerns, Third Parties and Drones
” (Jan. 25, 2018).