Monthly Archives: February 2018

The Mounting Migration to Standardization

As organizations gravitate away from highly customized legacy accounting systems and many systems arrive at their end-of-life, Eagle’s Mathieu Benoit highlights several best practices for firms ready to embrace the agility of an open platform

Mathieu Benoit, Consulting Lead

Almost as certain as death and taxes, accounting regulations impacting asset managers will remain in a state of perpetual motion. In Canada, for instance, the next phase of IFRS implementation introduces what KPMG billed in a recent white paper as an “unprecedented level of change”—affecting everything from how financial institutions classify and measure assets to how they account for hedging instruments. The paper, “Ready? Or Not: The Next Phase of IFRS,” also highlights that it is not just the regulations that are changing, but that the more demanding landscape is even forcing organizations to rethink their philosophy around technology altogether. At Eagle, we have seen this translate into a pronounced shift in client preferences from legacy accounting systems to more standardized platforms that offer both agility and the ability to keep up with today’s business needs.

In the past, asset managers generally had little choice but to build highly customized accounting systems. Though this allowed Chief Information Officers to tailor the technology and software capabilities to the unique needs of the back office, it often required running additional systems like Excel in parallel or applying other workarounds to “fill in the gaps.” In turn, these workarounds increased both risk and technology costs related to the management of data and enterprise security.

Fast forward ten years, however, and not only has the number of financial products and asset classes grown considerably in size and sophistication, but also so has the number of complementary applications that are often tied into the accounting system. Adding greater complexity, for many, an accounting system is not solely an accounting system—it can double as a client reporting system, an analytics engine or even a makeshift data warehouse. And while these custom-built systems may produce the required outputs on a day-to-day basis, a new challenge often arises anytime a change is required, whether it is new regulations, a new investment strategy, or even an acquisition. Today, the price of past customizations and workarounds is often measured in units of time and complexity. Time management is also important when processing daily activities, Eagles’ exception-based system helps users to be efficient and effective.

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Moving from the Margins

Blog posted initially by CloudMargin as part of their Industry Insights Series

Increased use of derivatives and regulatory change is leading to increased focus on how investment managers manage collateral and post margin. 

Brian Dunton, Head of Instrument Engineering

The normalization of derivatives has sparked a sharp increase in their use among investment firms

Among Eagle’s client base of global investment managers, we’ve seen derivatives move from the periphery of the market to become a mainstream investment. Instruments that were once widely considered to be “exotic” are being used by traditionally conservative firms to diversify their portfolios and hedge positions.

A few years ago our typical client trading swaps would hold a handful of positions across a couple of different flavors of derivatives. Now we have clients with thousands of positions spanning many derivative types, each with their own unique conventions. This rapid increase in volume comes with an equally rapid increase in exposure, which has brought efficient collateral management back into the spotlight.

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