SIMCORP REPORT REVEALS THE CHALLENGE OF DATA MANAGEMENT.
Although regulation has been a constant theme over the past ten years, buyside firms had mixed views over the impact, according to the third annual 2019 European InvestOps Report: Achieving Operational Agility and Outperformance.
Some saw it as a driver for lasting change because it has increased transparency and tackled reporting challenges due to legacy systems. However, the speed at which regulation is coming into force, was seen as a burden with 62% of buyside heads of operations yet to start projects for the incoming Uncleared Margin Rules (UMR). This is despite an estimated 12-18 month implementation process and with the new rules coming into full scope next September.
Commissioned by SimCorp and independently conducted by WBR InvestOps, the report surveyed 100 buy-side heads of operations from asset management, pensions and insurance firms with AUM above €10bn, across the UK, France, Germany and the Netherlands.
The report also found that despite many operations leaders working towards building a golden source of data, the lack of a centralised data fount still remains one of the biggest challenges for the front office. This is impacting both their control over and also access to key data sets for investment decision making, causing a crucial difference between generating alpha and a losing position.
It is also perhaps unsurprising to see over half of the firms surveyed, are struggling from data issues given the combination of disparate, best of breed systems and manual processes comprising much of today’s alternative solutions. What is not expected though is that the report found these firms are considering limiting exposure, a risk to alpha generation, rather than countering the operational challenges.
However, the report did not just highlight the difficulties. It noted that despite these issues as well as new regulations, geopolitical uncertainty, fee compression and M&A, European buyside firms have seemed to turn a corner, with a new forward-thinking outlook. The report found a renewed and progressive drive to growth and consolidation, with 41% also set to adopt multi-asset enabled investment platforms.
David Weaire, head of operations, investment, Investec Asset Management and one of the report’s contributors, says: “Getting the foundation right is crucial for investment managers as they embark on the journey towards supporting investment at optimal efficiency. Having accessible, standardised data available to those making daily investment decisions is a key tool, to optimise how these choices are made and improve the chance of finding alpha.”