ENGAGE18 Q&A: Becoming a Data Visionary through Eagle Managed ServicesSM

Eagle’s Liz Blake, who will be speaking at ENGAGE18, highlights why forward-thinking asset managers are abandoning an “incremental” approach to data management

Q: Most asset managers have been affected by significant shifts that have occurred across the industry landscape, including the rotation into passive strategies and its impact on fees, the growing regulatory burden, and, of course, the pace of technological change. How have you seen firms deal with these challenges as it relates to their approach to data management?

A: Firms typically pursue one of two possible paths. You have the data “incrementalists,” who are focused on the immediate challenge and are not necessarily looking at the whole picture. They tend to be far more focused on the production and maintenance of data rather than analyzing it. Ultimately, this speaks to the amount of value that the broader organization receives from the data management function. Most financial organizations, before now, have resisted more comprehensive transformations because the evolving backdrop has created a moving target. But given the insatiable demand for data today—driven by growth in the volume, varieties and velocity of data—many organizations are at a point where they need to transform their data management function or fall behind. Otherwise, they may struggle to accommodate AUM growth, launch new products, or even expand into new markets. Organizations today can no longer solve the data explosion by simply adding bodies or by sticking new technology onto old systems. Taking a reactive, piecemeal approach may solve each challenge as it arises and can help delay big decisions, but it comes at the expense of adding more technology debt, creating a more complex operating model, and introducing greater operational risk.

Then you have the true data visionaries, who are willing to step back and reconsider how their organization is positioned to meet new challenges. Those who fit into this category recognize the consequences of poor data quality. And they’re willing to reimagine a more revolutionary, data-inspired operating model that goes beyond simply meeting an immediate need to materially enhance the value of desired outcomes.

Q: That’s interesting. So how do you characterize those firms that would be considered a data visionary?

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ENGAGE18 Q&A: Brian Dunton on Streamlining Derivatives Operations

Eagle’s Head of Instrument Engineering, Brian Dunton, gives a preview of his presentation at ENGAGE18. The discussion will focus on the significant uptick in derivatives volumes among Eagle’s client base and how Eagle’s 2017 release adds features designed to support additional asset classes and improve client workflows.

Q: The use of derivatives by asset managers has been increasing steadily over recent years. You have year-to-date statistics showing that notional values of interest rate swaps and credit default swaps have increased by 40% and 69% respectively. Trade counts have also increased dramatically. What’s driving this? 

A: There are a number of factors driving the increased use of derivatives, but one of the largest is the historically low interest rate environment. This gives investors the opportunity to gain large market exposure at a low financing cost without using up their cash reserves.

Another factor is the large degree of standardization, through OTC clearing, that makes derivatives easier to trade and reduces counterparty risk. As a result, investors have become more familiar with these securities and incorporate them more readily into their portfolios. In an increasingly competitive market, investors are turning to derivatives as a way to drive alpha and beat the benchmarks.

Political and economic uncertainty—both at a national and global level—is also playing a role as investors look to hedge risk. Whether it’s the prospect of a trade war or the volatility we saw in the stock markets in February, which was exacerbated by margin investing, investors are anxious to mitigate these risks.

Q: What challenges does this present for asset managers?

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Meet…Mark Goodey

Eagle Investment Systems’ new Senior Principal of Investment Analytics, Mark Goodey discusses his role, the challenges facing risk and performance professionals on the buy-side and the impact new and emerging technologies are having on the industry.

Q: Mark, you spent over 20 years at buy-side firms including JP Morgan Asset Management, Aviva Investors and F&C Asset Management specialising in market risk and investment performance. What are the main challenges performance professionals run up against? 

A: For the last 40 years the math of performance has been roughly the same. The models themselves haven’t really changed and the importance of data management has been consistent. Today, though the industry has become more complicated and the tools at our disposal have improved, we still spend the majority of our time managing data. As a result, I don’t know of many performance teams on the custody- or buy-side that have shrunk, they just keep getting bigger to cope with the increased data demands. 

Q: How do you think new and emerging technologies like AI and robotics will shake up risk and performance measurement?

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ENGAGE18 Q&A: Rob Hegarty on how asset managers can reap the benefits of technological disruption

Rob Hegarty, managing partner and founder of financial markets, technology and data consultancy, Hegarty Group, and panel moderator at ENGAGE18, shares his views on the technology trends shaping the asset management industry.

Q: What do you see as the most important technology trends shaping the asset management industry? 

A: We are currently in a very interesting time for the asset management industry. There’s never been a time more full of change, challenge and promise than where we are today and this is largely due to the evolution of technological change.

The industry is at a tipping point, driven by the confluence of two key factors: the proliferation of data and rapid advances in technology. The proliferation of data includes everything from structured data to unstructured data to the availability of alternative data. In terms of technology, the biggest shift we’re seeing there is around artificial intelligence (AI) and machine learning (ML). The industry has already started to latch onto that evolution with the widespread adoption of robotic process automation (RPA)—an early form of AI—over the last few years, but we’re still in the early innings of the explosion in the use of these technologies.

Together, the proliferation of data combined with the advances in AI and ML is dramatically changing the investment landscape.

Q: And what emerging technologies do you think will have the biggest impact on the industry in the short-term and the longer-term?

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InvestOps Recap: The Misconception Around Global Operating Models

Eagle’s Liz Blake, speaking on a panel at the InvestOps conference, highlights why all asset managers should be thinking about a global operating model regardless of where their business resides

Liz Blake, Global Head of Eagle Managed ServicesSM

As part of a panel at the recent InvestOps USA Conference the moderator opened the discussion asking how buy-side firms are navigating globalization’s many obstacles. While added regulatory demands and competitive pressures have certainly made these challenges more acute, the opportunities available through adopting a global operating model should not be overshadowed. In fact, even for domestic firms—who may harbor no designs to open overseas locations—the ability to extend the business day through “follow the sun” (FTS) workflows is becoming a necessity to accommodate the new and pressing demands being placed on operations teams.

This was a theme I discussed at the conference, which also featured panelists in senior operating roles at Invesco, Manulife Asset Management, and Putnam Investments. The larger point is that given the complexities and challenges that face asset managers of all sizes today, not having a team in place working around the clock to instill a true data foundation can create a competitive disadvantage in the form of back-office bottlenecks and the erosion of trust across the enterprise. If portfolio managers don’t have conviction in the data or if accounting and reporting teams spend their days trying to resolve data errors, the impact will extend far beyond lost efficiencies.

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Mentorship: Standing on the Shoulders of Giants

A recent panel hosted by Eagle’s IMPACT Multicultural Resource Group showcases the value of mentorship to leverage the benefits of a diverse and talented workforce

Kevin Madeira, Head of Relationship Management – Americas

The greatest innovators are often quick to credit that progress doesn’t come without standing on the shoulders of giants. While this is typically an idea that is tossed around in technology or science circles, it can be just as true when considering the value of mentorship.

As part of a recent panel discussion hosted by Eagle’s IMPACT resource group, participants highlighted not only how they’ve been supported by role models throughout their careers, but also shared some of the most important lessons learned along the way. I moderated the discussion and was joined by Head of Sales Support Akhar Mathews, Head of Transformation Rajan Venkitachalam, and Senior Project Manager Milva Santarelli.

The conversation touched upon several great topics. What quickly became a recurring theme, however, is that mentorship often extends beyond merely offering support and guidance. The best mentors—and the most inspiring—will embolden colleagues to challenge themselves in new ways. This approach allows individuals to build out their skillsets, but more importantly, instills the kind of confidence that empowers people to become leaders through recognizing and honing their unique value to the organization.

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#PressforProgress Spotlight: Automation and Transformation

How Maureen Buotte’s work became the foundation of Eagle’s hosted cloud solution and an example for women engineers across the company

Mike Fitzgerald, Chief Information Officer

Over the past few years, issues of diversity in business and technology have taken center stage. Whether it is the #PressforProgress in gender parity that was the theme of this year’s International Women’s Day or the rise of nonprofit groups like Girls Who Code designed to encourage young women’s interest in typically male-dominated STEM industries, there are more efforts than ever before working to increase women’s rights, responsibilities, and roles in the workforce and beyond. Consequently, these efforts are paying off. Study after study has shown that gender-diverse companies are more profitable and deliver better results.

One of Eagle’s longest-serving engineers, Maureen Buotte, understands these challenges. When she started her career two decades ago at ITS Associates (which would later become Eagle ACCESSSM), she was the only female engineer. As one of the only women in her engineering school, she was accustomed to feeling outnumbered. During this time, Maureen quickly realized how important diversity and mentorship would be in the growth and transformation of Eagle’s software and the evolving impact of women in the company—and worked to become instrumental in both. In fact, one of her earliest contributions became a foundational component to Eagle ACCESSSM, Eagle’s secure private cloud. And her efforts to mentor women at Eagle have mirrored and perhaps spurred the progress being made in the industry today.

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#MyFeminism: Reflecting on One Woman’s Journey at Eagle

Darcie James-Maxwell, Eagle’s Head of Canadian Operations, is participating on the CIBC Mellon WIN panel today celebrating International Women’s Day and the #PressforProgress.

Darcie James-Maxwell, Head of Canadian Operations

It is with great pride and gratitude that I am presented with the opportunity to be a part of International Women’s Day. As I reflect on my own career journey starting as an analyst, I am thankful for the women who paved the way for many of us to finally have a seat at the table. As a woman of color, I’ve had more than one obstacle to overcome as I pursued my passion for competence, credibility and leadership in the fintech industry.

Over the last year, women’s issues have been firmly in the spotlight. With companies across the world committing to closing the gender pay gap, it feels like we are closer than ever to achieving gender equality in the workplace and in our everyday lives. Movements fueled by women have inspired the women’s marches across North America while the #MeToo Movement has gripped social media, resulting in recognition and equality expansion. As a result, Canada has recently proposed an amendment that redefines its Labour Code to support women on equal footing in the workplace. Unfortunately, we still have a long road ahead of us. A quote from a recent report from the World Economic Forum states that gender parity is more than 200 years away. Therefore, the relevancy of this year’s theme for International Women’s Day – #PressforProgress – could not be any more appropriate.
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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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