Monthly Archives: September 2019

Implementation’s Rosetta Stone: A Strategy for Effective Communication

Jamie Harrington, Principal and Project Executive, Global Professional Services

When implementing new systems, the progression from proof of concept to the go live date will generally move in fits and starts, at least in the early going. It’s not unlike a home renovation, in which the contractors don’t know what awaits behind the walls until demolition is underway. The same is true for technology, as vendors evaluate and untangle existing software before assembly of the new solution can begin. From there, whether or not the effort can build momentum often depends on one critical factor: consistent and transparent communication that keeps the client abreast of new developments, while the vendors are afforded the context and direction necessary to get ahead of potential issues that might otherwise stand in the way.

While facilitating transparency as part of an implementation may sound simple, it is a detailed and demanding process. The effort entails articulating common goals, maintaining open communication in pursuing the stated objectives, and requires a strong commitment from both sides of the project. Communication between clients and vendors can sometimes be more intricate and demanding than some initially realize. This is particularly the case for new relationships as each side moves along the learning curve to understand the other’s culture, processes, and protocols around regular correspondence, as well as preferences for communicating updates and milestones.

Again, it may sound easy, but the efforts required early in the relationship to build trust and credibility can significantly ease the most complex implementations. While each organization has their own preferred style of communication, we’ve found three common threads that tend to characterize some of the most successful implementations. Read More…

Credit Events: When the Effects of Weak Markets Leak into Operations

While credit derivatives provide a valued hedge during downturns, the heavy lifting involved with defaults and bankruptcies requires an automated solution.

Jawann Swislow, Instrument Engineering Analyst

During economic downturns, there are a number of consequences felt by various market participants. Individual investors may see a dip in the value of their retirement funds, while investment managers or asset owners will likely have to rebalance portfolios or consider more sweeping reallocations into vehicles or asset classes that carry less downside risk. Although derivatives investors may appear more protected through certain hedged positions, they aren’t immune either as many are affected by a lesser-known phenomenon, known as credit events.

For the uninitiated, a credit event occurs when an organization is unable to meet its financing obligations. This is most often due to a bankruptcy filing, payment default, or debt restructuring, which can trigger payments on credit derivatives linked to that organization. To fully understand credit events and their potentially sweeping implications, it’s helpful to consider the economic climate roughly a decade before the financial crisis of 2008.

The first credit default swap (CDS) was created in 1994 by Blythe Masters of JP Morgan. The instrument provided a means for investors to take a position on the credit worthiness of almost any organization in the market that carried debt. The CDS is based on a specially designated debt obligation, or a reference obligation, provided by the issuer of the financing arrangement.

In a CDS there is a protection buyer, who takes a negative (or short) view on the reference obligation’s credit worthiness, and a protection seller, who takes a positive (or long) view. The buyer pays a quarterly coupon to the seller in exchange for protection against any credit events. In the event of a default, bankruptcy, or other kind of credit event, the deal is terminated and the protection seller must pay the buyer a fee based on the size of the trade’s notional value and the amount of capital that can be recovered through a restructuring. A similar and newer derivative, the credit default index swap (CDX), tracks a basket of 100 reference obligations and trades on a factor after a credit event instead of being terminated. Read More…

Reimagining Performance Measurement in an AI World

A recent panel discussion highlighted two opposing theories around which skillsets will shape performance measurement and attribution in the future.

Mark Blakey, Product Management

In an era of disruption and digital transformation – marked by hundreds of fintech and software vendors coexisting across the asset management landscape – performance professionals may be asking themselves how they can best leverage the latest leading capabilities available to support their business. More poignantly, many are also trying to discern how the performance function itself will evolve and whether technology will alter their role altogether. It can be a polarizing topic.

Specific to performance measurement, competing viewpoints generally emphasize either one of two skillsets that will be required as the middle office evolves, pitting technological proficiency against domain expertise. The divide between the two camps will only grow wider until organizations have a better sense of where precisely technology will or won’t fit in. In the meantime, many are left wondering, if technology isn’t going to take their jobs outright, should they be worried that a “technologist” someday will?

Read More…

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