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Time to Finally Release Asset Managers from the Shackles

Traders Magazine Online News, February 9, 2018

Prashant Kumar

A new approach to paying for research, active vs passive, the Senior Managers Regime, robotics and AI Ė all of these issues are fundamentally changing the world of investment management as we know it. The problem is, they have all come at once, which is why it has never been more important to give the front office some much needed headspace to think this all through and carry on trading.

Unfortunately, for too long now, money managers have been bogged down with distracting items such as having to approach multiple IT people in order to download their own extracts from spreadsheets, or to see and use data in new ways. While it may seem very specific, this sort of scenario occurs frequently and the problems mount up over time. When all a fund manager really wants is for one IT system to provide them with a download as they need it, it is high time this issue is addressed to help free up capacity.†

After all, the true value for any front office is the ability for them to maintain and embrace their own processes and manage their workloads, with a governance framework that isnít an inhibitor. However, in order to do this, they need to overcome a number of pressing external and internal challenges. To start with, there is the reporting overload issue fuelled by SEC Funding Liquidity and Reporting Modernisation rules and of course, the newly implemented MiFID II. The amount of information that now needs to be gathered on the exact products and instruments being traded is at breaking point. All this detail, on both the instrument and issuer level, needs to be identified for each transaction. On top of this, a huge amount of counterparty information now needs to be managed.†

But while important, reporting is by no means the only issue facing the investment industry. According to a recent survey by the Investment Association, total assets under management in the UK skyrocketed by 20 per cent in 2016 to a record £6.9 trillion. If this growth rate is anything to go by, asset managers are likely to be adding new asset classes at a rate of knots. Traditionally, this has been a sticking point, as any attempts to introduce economies of scale have impaired performance and undermined a portfolio managers ability to respond quickly to clients. If this wasnít enough to think about, there is the raft of internal demands to take on board from all parts of the business.

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