SimCorp reveals fixed income revenues hamstrung by fragmented operations
19 April 2018 New York
Image: Shutterstock
Some 66 percent of fixed income professionals are seeking to reduce high operating costs, according to a survey by SimCorp.
In a report, SimCorp suggested that these high operating costs would be treated as the number one priority for respondent’s in 2018.
The report entitled ‘Fixed Income 2018: Goals and Challenges for the Front Office’, was put together by Worldwide Business Research (WBR) Insights and surveyed 100 North American fixed income professionals, from traders and portfolio managers to CIOs.
The report showed that 63 percent of participants listed the need for new fixed income technology, among other priorities.
Some 81 percent of respondents said they are hampered in understanding firm wide limits, counterparty exposure and other important risk indicators, while 70 percent said securing timely and accurate start of day and intraday positions and cash projections is a challenge.
The report also found 59 percent struggle to measure investment performance relative to blended benchmarks and indices, in addition 56 percent said they spend up to an hour reconciling positions and cash at the start of their day, just to reach a ‘satisfactory confidence level’.
SimCorp said the report comes at a pivotal time in the global market, which is marked by the return of inflation and volatility, and unveils the impact of costly and ineffective fragmented operations, critically affecting the success of fixed income desks.
The software provider also said technological enhancements, coupled with the constant pressure to reduce costs, indicate that the current operational environment of legacy and best of breed systems cannot support the long term strategy of fixed income desks, and are also an expensive burden on day to day front office activities.
Terry Flynn, front office specialist at SimCorp, commented: “The report’s findings make it clear that fixed income operations is in need of significant change.”
“Delayed and incomplete data, limited firmwide exposure views, restrictive asset class coverage and Excel-driven manual reconciliation, have tied the hands of many fixed income desks.”
He added: “To free themselves of this burden, firms need to eliminate the bottlenecks by consolidating their investment operations. This will create the operational efficiency required to deliver competitive returns and attract and retain investors.”
Oliver Kirkbright, content director of the fixed income leader’s summit at WBR, said: “Fixed income professionals have a clear opportunity to gain back market share. But to do this successfully, they need to address the operational hurdles that are currently thwarting their profitability, and seek a consolidated operational strategy that will deliver immediate results, as well as long-term profitability.”
In a report, SimCorp suggested that these high operating costs would be treated as the number one priority for respondent’s in 2018.
The report entitled ‘Fixed Income 2018: Goals and Challenges for the Front Office’, was put together by Worldwide Business Research (WBR) Insights and surveyed 100 North American fixed income professionals, from traders and portfolio managers to CIOs.
The report showed that 63 percent of participants listed the need for new fixed income technology, among other priorities.
Some 81 percent of respondents said they are hampered in understanding firm wide limits, counterparty exposure and other important risk indicators, while 70 percent said securing timely and accurate start of day and intraday positions and cash projections is a challenge.
The report also found 59 percent struggle to measure investment performance relative to blended benchmarks and indices, in addition 56 percent said they spend up to an hour reconciling positions and cash at the start of their day, just to reach a ‘satisfactory confidence level’.
SimCorp said the report comes at a pivotal time in the global market, which is marked by the return of inflation and volatility, and unveils the impact of costly and ineffective fragmented operations, critically affecting the success of fixed income desks.
The software provider also said technological enhancements, coupled with the constant pressure to reduce costs, indicate that the current operational environment of legacy and best of breed systems cannot support the long term strategy of fixed income desks, and are also an expensive burden on day to day front office activities.
Terry Flynn, front office specialist at SimCorp, commented: “The report’s findings make it clear that fixed income operations is in need of significant change.”
“Delayed and incomplete data, limited firmwide exposure views, restrictive asset class coverage and Excel-driven manual reconciliation, have tied the hands of many fixed income desks.”
He added: “To free themselves of this burden, firms need to eliminate the bottlenecks by consolidating their investment operations. This will create the operational efficiency required to deliver competitive returns and attract and retain investors.”
Oliver Kirkbright, content director of the fixed income leader’s summit at WBR, said: “Fixed income professionals have a clear opportunity to gain back market share. But to do this successfully, they need to address the operational hurdles that are currently thwarting their profitability, and seek a consolidated operational strategy that will deliver immediate results, as well as long-term profitability.”
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