Trends

Building a Platform for Regulatory Reporting with a Solid Data Management Foundation

Marc Rubenfeld, CIPM, Head of Eagle Solutions EMEA/APAC


Building a Platform for Regulatory ReportingThe regulatory environment and increasing compliance demands persistently rank among the top concerns for European financial services firms and, as the rules are always changing, these topics continue to be the subject of much discussion. At Buy-Side Technology’s recent European Summit, for example, both roundtables and panel debates focused on how firms can address this growing regulatory burden.

Since the global financial crisis began, we have seen a swath of regulation across the financial services industry. Legislation that has, or will soon, come into effect includes the Alternative Investment Fund Managers Directive (AIFMD), Solvency II, the Markets in Financial Instruments Directive (MiFID) II and Regulation (MiFIR), Undertakings for Collective Investment in Transferable Securities (UCITS) V and the European Market Infrastructure Regulation (EMIR). Although these regulations target different areas of the industry and tackle different issues, they are broadly designed to improve transparency, risk management and customer protection.

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Standardizing Reference Data

Paul McInnis, Head of Enterprise Data Management, Data Management


The financial crisis and the resulting changes to the regulatory environment have focused the attention of investment firms on data management. Greater demands for reporting and risk management have made organizations recognize the necessity for clean and accurate data. At the same time, to help defray the rising cost of compliance, they are increasingly seeking greater efficiency and cost-savings.

As a result, we are witnessing a fundamental change in how investment firms view and consume reference data. It’s an area I will be discussing in some detail as part of a panel discussion at the North American Financial Information Summit taking place on May 20th.

Reference data offers little in the way of a competitive advantage, rather it’s a necessary requirement of doing business. Yet acquiring and integrating it is typically an ongoing and resource-intensive undertaking and many firms spend significant time post-trade repairing their security reference data to fulfill risk and reporting demands.
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Relaxation in investment rules puts the spotlight on technology for Chinese insurers

Peter LiuRegional Sales Director, Eagle Investment Systems


In 2012, the China Insurance Regulatory Commission (CIRC) began relaxing the restrictions on permitted investments for insurance firms, opening the door for insurers to look beyond domestic fixed-income products and pursue investments in new asset classes such as equities and alternative assets, as well as offshore investments. While insurers in China have cheered the CIRC’s actions, the Commission’s increasingly progressive stance is exposing some of the shortcomings of Chinese insurers’ technology and systems that underpin their investment strategies.

In 2014, for instance, insurers were able to invest in private equity for the first time, while the proportion of assets that could be invested overseas has been extended from 5% to 15% of total assets. This relaxation offers obvious benefits, as insurers can target investments with potentially greater returns and higher yields, while eliminating some of the risk of being overexposed to Chinese bonds. Still, while many firms have been waiting to see what their peers will do before making any bold moves, the CIRC’s relaxation efforts have already had an effect on allocations. According to industry research, in the 12-months trailing January 31, 2015, alternative investments surged 66.4% to Rmb2.3tn and accounted for 24% of total insurance investments in the period. In contrast, investments in bank deposits and bonds grew by around nine percent in the same period.
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Millennials and the evolution of the financial services industry

Steve Taylor, Head of Technology & Architecture


I was at a conference recently and a fascinating topic was discussed at the keynote; the impact of the “hoodie and flip-flop” generation on how we work.  Specifically, what role will the Millennials play in financial services, and how will this generation and future generations change and shape the business processes within our industry?

From my viewpoint it starts with technology. Millennials have grown up in the Digital Age. They have always been familiar with the internet and, have ascended into adulthood during a period marked by tremendous technological advances, from the growth of the internet, to the development of smart phones and tablets. A recent InformationWeek article further hardens this observation “74% of respondents say there’s a difference in approach to technology between workers under 35 versus those over 35.”

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Engage 2015 Coverage: Investing for Growth

Stephen Johns, Manager of EMEA Services Delivery EIS


It’s an age-old question: what comes first, growth or the capital investments that drive growth? At a panel Tuesday morning, “Growing Assets Efficiently,” four executives discussed their approach to this strategy question and highlighted that while it can be difficult to make the leap and overcome certain challenges that come with doing so, their investments to gain control of their data have indeed paid dividends across their businesses.

A survey cited during the panel seems to imply that most organizations in banking and finance still view IT and technology as merely a cost of doing business. Indeed, 67% indicated they are increasing their “lights on” IT spend, while only 20% view this as an investment geared for growth. It’s no wonder that nearly one in three do not believe their IT budget meets an expected ROI, and, among those polled, the average spend on technology came in below 7% of revenue.

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Spotlight on Engage – Enter PBOR

Rich Mailhos, Product Manager, Eagle Investment Systems


Investment firms should be well versed in the value afforded through a data-centric investment book of record. An IBOR, most well know, centralizes and automates a firm’s investment data to allow for one consolidated view into both start-of-day and intra-day investment positions. It differs from an ABOR, or accounting book of record, in that it’s less focused on the historical data needed for end-of-day bookkeeping and designed for real-time needs, such as collateral and cash management, exposure reporting and compliance. Where an IBOR can sometimes fall short, however, is when the front office tries to stretch its functionality to provide performance and attribution data or perform comprehensive risk analysis.

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Spotlight on Engage – Locking in on IBOR’s Moving Target

Paul McInnis, Director of Product Strategy, Data Management, Eagle Investment Systems


The concept of an Investment Book of Record, or an IBOR, has been around for years, as Eagle has been offering IBOR solutions as part of our Data Management platform for over a decade now. More recently, however, we have witnessed a renewed buzz around the concept, which has created some unwanted side effects. While this added attention has motivated investment firms to explore how an IBOR might apply to their business, the very definition of what an IBOR is has become convoluted. Ironically, this industry buzz has led to more confusion and less understanding around the acute business needs that demand an IBOR solution.
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Spotlight on Engage: Building a performance measurement solution for the future

Marc Rubenfeld, CIPM, Head of Eagle Solutions EMEA/APAC


engage2015What is your market going to look like in 2020?

 

Understanding how your market is evolving should provide the starting point for any evaluation or review of your technology. Unlike Steven Spielberg’s 1989 classic film, Back To the Future Part II, which took Marty McFly to a futuristic 2015, it doesn’t require a time-travelling DeLorean or such a flight of fancy.

2020 is only five years away and the patterns that are shaping how the market is developing are already manifesting themselves. Acknowledging these changing demands and evaluating your preparedness for this future against those is key to keeping business objectives and your client-base at the forefront of any new software implementation.

At Engage I’m going to be joined on-stage by Naresh Subramaniam, head of investment services at Melbourne-based National Australia Bank (NAB), which went through exactly this process when selecting a new performance measurement platform to build the next generation of their offering on. They knew that their in-house performance measurement tool was struggling to keep up with the demands placed on it, but to ensure their new solution would have the capabilities to meet their future requirements they knew they needed to start by looking at their changing marketplace.
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Performance Book of Record (PBOR): A new approach to measuring performance, exposure and risk

Rich Mailhos, Product Manager, Eagle Investment Systems


pbor_coverMost investment managers have a range of spreadsheets or desktop applications that may ‘tactically’ calculate performance and carry out risk analysis for specific asset classes. While there will always be a place for these discrete quantitative tools, increasingly firms are looking for an enhanced, comprehensive view of performance that accurately captures the investment activity across the entire enterprise. This trend, which is being driven by growing internal needs of global asset managers, more exhaustive regulatory requirements, new client demands and the ongoing drive for a competitive advantage, will only pick up more steam in 2015 and beyond.

To help clients address these demands, we released a new white paper that outlines how a data-centric approach can enable firms to achieve a ‘true’ total view of performance results and exposures, as well as other enriched information, across all business lines and asset classes to effectively create a Performance Book of Record or PBOR.

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