Maintaining an Investment Book of Record is becoming a key operational requirement in the investment management industry. An IBOR provides an updated intraday view of positions across all asset classes, enabling firms to make sound, timely investment decisions.

“The business problem that is generating a lot of the interest in IBOR is that firms are looking to have more of an intraday view of data within their organization,” Bob Leaper, head of North America at DST Global Solutions, told Markets Media.

Although a firm that has one trading system and one accounting system can usually maintain an accurate view on intraday positions, it becomes a greater challenge for a more complex organization. “This is particularly the case for firms that have a lot of quantitative products or indexed products where they need to be very proactive even with what’s happening within those portfolios or mutual funds or ETF,” Leaper said.

Firms must better manage investment data to support internal business dynamics and to prevent data silos becoming a bottleneck and hindering these firms’ ability to grow and scale their businesses.

“The vast majority of the universe of buy side firms need an IBOR,” said Todd Healy, head of investment operations at BMO Global Asset Management, during a webinar. “A lot of firms are maintaining an IBOR on the trading desk. A portfolio manager might be doing an Excel calculation to verify their positions before they start the day.”

A large investment firm could have tens or even hundreds of IBORs, depending on how many portfolio managers it has. “From a BMO perspective, I don’t want to see alpha producers doing reconciliations,” said Healy. “That should be done within the accounting functions of an operations group. These people need to be spending time researching and staying aware of what’s going on in the market, not worrying about whether their trade posted correctly.”

Industrial Alliance Investment Management, the investment arm of Industrial Alliance Insurance and Financial Services Inc., has deployed accounting and analytics software from Eagle Investment Systems, a subsidiary of BNY Mellon, in order to develop an IBOR.

“We decided to extend our relationship with Eagle and implement Eagle Accounting because we clearly recognize the benefit of a single integrated portfolio management platform to support our ABOR (Accounting Book of Record) and IBOR (Investment Book of Record) needs,” said Denis Beaulieu, director systems and chief compliance officer, Industrial Alliance Investment Management, in a statement.

DST’s Leaper said that an Accounting Book of Record (ABOR) is the traditional accounting system that’s typically updated at the end of the day. “You’ll actually bring in prices, value your portfolio, generate your accruals, and perhaps post a net asset value to your mutual fund firm off of your ABOR,” he said.

The challenge is that the information is accurate as of the end of day, but doesn’t take into account events that took place throughout the day. “Start of day there may have been contributions/withdrawals, or perhaps backdated trades or corporate action that had been announced that are not in the end of day view because in 6 hours or 8 hours a lot can change,” said Leaper.

According to Julian Webb, head of data management and analytics at DST Global Solutions, there is an increased market appetite for flexible IBOR solutions that can function independently of both front and back office solutions.

“IBOR is not a one-size-fits-all concept and we recognize the varying challenges global firms are facing when implementing this kind of solution,” said Webb. “The ability to visualize positions across asset classes and regions intraday is essential for firms looking to have better information on which to base their investment decisions.”

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