Torben Munch, chief operating officer of Danish investment-management software company SimCorp, likes to tell a story about his firm’s relationship with Lehman Brothers.
The Wall Street firm was a SimCorp client when it collapsed in September 2008. Munch found Lehman’s collapse had created confusion and concern as asset managers and brokers scrambled to find out their Lehman exposure.
Regulators wanted minute-by-minute reports of brokerages’ and fund managers’ exposure to Lehman. SimCorp, terrified the bankruptcy of Lehman would lead to a critical loss of clients, found instead it had won new clients.
“People needed clarity, one global view of their exposure to Lehman, no matter how many counterparties were involved,” says Munch. “We could provide that.”
In Australia SimCorp’s clients include the investment-management firm Challenger, superannuation fund Victoria Funds Management Corp and insurer QBE. Less than 10 per cent of SimCorp’s €195 million revenue came from Australia.
Asset managers need to upgrade their systems, which are not up to date because of cost pressures, says Munch. In 2011 Asian asset managers were increasing their information-technology spending and he expects their Australian counterparts to do the same this year as they get rid of old systems.
“I sense optimism among asset managers,” says Munch. “They’re talking about inflows, acquisitions and growth.”
The proliferation of structured products and over-the-counter instruments has further prompted asset managers to upgrade their systems. A Tower Group survey found that 56 per cent of asset managers felt their platforms were inadequate to record their transactions.