SimCorp: Counterparty exposures present biggest struggles for firms
01 February 2019 London
Image: Shutterstock
Some 79 percent of buy-side heads of operations reported that their biggest operational struggle as accurately measuring firm-wide limits and counterparty exposures in a recent SimCorp commissioned survey.
The survey, featured within a whitepaper, also found a further 77 percent of respondents viewed the centralisation of data for a consistent, firm-wide view of the market, as a critical issue.
SimCorp said: “If we look at why that centralised view is such a struggle for many, we
needn’t look much further that than what is driving the strategic agenda.”
The survey indicated overhauling legacy systems (81 percent), automation (68 percent) and consolidating systems (61 percent) were considered the top three strategic priorities for
investment firms.
Commenting in these figures, SimCorp affirmed: “The findings can be explained by a common mistake many firms continue to make; trying to do things the way they’ve always done them, instead of looking at how to disrupt and transform the process.”
SimCorp advised: “By embracing data management, rather than outsourcing it, firms can
open an infinite number of opportunities to complement their own core activities and provide competitive edge over peers.”
SimCorp said that application programming interfaces present an opportunity as firms can create rich functionality and data while utilising them.
It also advised embracing emerging technologies such as machine learning, can drive up automation further and potentially preempt errors such as settlement-breaks in the post-trade space.
SimCorp also discussed that over the last two decades, while multi-asset investment strategies may have transformed, much of the operations supporting these strategies and trading styles has remained largely unchanged.
It said: “A dangerous cocktail of compromising legacy architectures, countless outdated point solutions, and complex outsourced models have caused many buy-side firms to reach breakingpoint.”
“This status quo, which has dominated for so long, is now not only posing a threat to the potential success of multi-asset investing, but also jeopardising the very heart of investment management—alpha generation.”
SimCorp indicated this presents serious problems for a firm’s agility, impacting everything from launching new investment products ahead of the competition and sourcing additional alpha through new trading styles to accessing new asset classes to meet client demand.
The whitepaper stated one approach to tackling the current challenge, is to operate an insourced ‘golden master’ or single source of data.
It said: “Using an investment system that has an integrated Investment Book of Record, (also known as IBOR) at its core, since inception, provides these firms with the highest degree of integration and automation for their workflows.”
“The operational benefits address much of the current buy-side headache, including increased control and cost efficiency, while also reducing the operational risk that comes from managing duplicitous outdated systems.”
The survey, featured within a whitepaper, also found a further 77 percent of respondents viewed the centralisation of data for a consistent, firm-wide view of the market, as a critical issue.
SimCorp said: “If we look at why that centralised view is such a struggle for many, we
needn’t look much further that than what is driving the strategic agenda.”
The survey indicated overhauling legacy systems (81 percent), automation (68 percent) and consolidating systems (61 percent) were considered the top three strategic priorities for
investment firms.
Commenting in these figures, SimCorp affirmed: “The findings can be explained by a common mistake many firms continue to make; trying to do things the way they’ve always done them, instead of looking at how to disrupt and transform the process.”
SimCorp advised: “By embracing data management, rather than outsourcing it, firms can
open an infinite number of opportunities to complement their own core activities and provide competitive edge over peers.”
SimCorp said that application programming interfaces present an opportunity as firms can create rich functionality and data while utilising them.
It also advised embracing emerging technologies such as machine learning, can drive up automation further and potentially preempt errors such as settlement-breaks in the post-trade space.
SimCorp also discussed that over the last two decades, while multi-asset investment strategies may have transformed, much of the operations supporting these strategies and trading styles has remained largely unchanged.
It said: “A dangerous cocktail of compromising legacy architectures, countless outdated point solutions, and complex outsourced models have caused many buy-side firms to reach breakingpoint.”
“This status quo, which has dominated for so long, is now not only posing a threat to the potential success of multi-asset investing, but also jeopardising the very heart of investment management—alpha generation.”
SimCorp indicated this presents serious problems for a firm’s agility, impacting everything from launching new investment products ahead of the competition and sourcing additional alpha through new trading styles to accessing new asset classes to meet client demand.
The whitepaper stated one approach to tackling the current challenge, is to operate an insourced ‘golden master’ or single source of data.
It said: “Using an investment system that has an integrated Investment Book of Record, (also known as IBOR) at its core, since inception, provides these firms with the highest degree of integration and automation for their workflows.”
“The operational benefits address much of the current buy-side headache, including increased control and cost efficiency, while also reducing the operational risk that comes from managing duplicitous outdated systems.”
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