Organisations using legacy platforms will struggle to meet market and regulatory requirements, and should consider an investment book of record, according to one technology provider.
“When organisations are still using a legacy platform, they are forced to build and develop satellite systems, all sorts of different systems to try and move with the evolving requirements,” says Nick Quin, regional sales director of Simcorp, Asia Pacific.
Responding to IM Online’s recent report on Media Super’s issues with fund manager disclosure, Quin says the problem is created when investment organisations are unable to access accurate and enterprise-wide investment data.
“The result of that is that compliance regulations or providing reports to clients or management becomes a very onerous task and a very costly one,” he says.
With the influx of numerous regulatory requirements globally and domestically, including in the OTC derivatives space, Quin says the Australian industry will be significantly impacted.
“What we’re seeing a lot of is that organisations have multiple system environments.”
This means several systems to operate a whole book of records, and a whole investment portfolio, which places a burden on the establishment of a consolidated view of all the investments. “So you get a full transparent access across all asset classes, and you get a full view of your exposures to counterparties, to currency, to certain sectors or geographies.”
Quin says this is in line with the issues experienced by Media Super – service providers that would like to provide all the data, but are prevented from doing so. The data management strategy in a system environment and an operational strategy will dictate whether that’s possible, he adds. “We’re just seeing a lot of this.”
The onus is on organisations
He believes it’s going to be an increasingly significant issue for superannuation funds, creating far greater challenges amid an amplified regulatory environment.
“It’s putting such a burden on organisations; and first of all they have to have accurate data, so their investment data must be accurate,” he says.
This includes accurate valuations, exposures, and views of counter parties and counter party risks, to obtain an enterprise view of their investment.
And accurate data is a major issue, says Quin.
“When you add to that the multiple system environment across different asset classes, the burden for them to try and put all this data together for reporting to the regulators or reporting to their client base [or] management… there are no economies of scale, it’s not a sustainable model.
“Every time there’s a new regulation, it’s essentially a data problem. And even if they have the data, they will struggle to find it and they’ll struggle to put it together in a report in a timely fashion.”
Quin thinks organisations can benefit by having an investment book of record – a one-stop shop for all transaction and pricing data, including all portfolios and asset classes.
“If you have access to all of the information across your assets [and] exposures to counterparties, you’re going to have up-to-date views of your position. Now if you have that, you can make a far better and more informed investment decision. So you know your cash position, you know how much you’re exposed to certain counterparties. If that counterparty credit rating has dropped, you can very quickly act on that.
“If you don’t have access to that data, then you’re hamstrung. So it’s about having a consolidated single point where all your investment processes, all your assets, all your positions, are in a single place.”
