Regulation Slowly Easing for Buy Side: Survey

Terry Flanagan

Although regulation remains a top concern for asset managers, pursuing investment performance is shaping up as the battleground issue for 2014.

“While regulation continues to be a top priority for firms, the industry now has a much better understanding of what the regulations are and their attention is now on implementing what they know,” said Matt Gibbs, product manager at Linedata. “After five years of uncertainty following the crisis, asset managers are now looking to the future and focusing on investing.”

In Lindedata’s fourth annual Global Asset Management Survey, 49% of all survey respondents cited deploying regulation as their top current priority, 47% claimed investment performance as their main challenge.

With firms placing an increasing focus on how they drive and maintain investment performance, they must also look at their overall business, how they construct portfolios and determine what new products they can offer. When asked what their greatest challenges faced in the coming 12 months, 48% selected maintaining investment performance.

“This year’s survey results suggest a return to normalcy:” said Gibbs, who is responsible for Linedata’s order management system, compliance system, and execution management system. “Our client base is seeing that they want to concentrate on their core business, which is investment performance. In previous years, they were so worried about the regulatory landscape that that’s where they had their concentration.”

The survey revealed sharp dispersion between the U.S. and Europe in terms of regulatory concerns. As a total, 49% of respondents said they were worried about deploying regulation, but in the U.S. it was 37% and in Europe it was 59%. “The main reason for that is that Dodd-Frank has been around for a while, and is going through its implementation now, whereas in Europe, with MiFID and Emir, is only going through that process,” Gibbs said. “So the regulatory climate is much further along in the U.S, which is why people are less worried about it.”

With 43% of respondents considering moving some aspect of their business to the cloud, it‘s clear that firms are looking to focus on their core business while letting their technology be managed by external experts.

“People don’t want to manage technology through the desktop, they want to be on the cloud,” said Steve Francesco, CEO of Cohere Communications, a provider of cloud-based technology for the financial services industry. “We don’t see any slowdown in this model. We see people wanting a turnkey environment where they no longer have to manage technology.”

When asked what, if any, business processes firms are currently running or planning to run in the cloud or as a hosted solution, an overwhelming number of respondents said “none”. There was equal distribution among those who claimed they would run their front or back office processes in the cloud.

“Compliance is very much seen as an area where they would like us to manage as a service,” Gibbs said. “Rather than outsourcing data, software, or hardware, firms want to take certain aspects of compliance and see if we can offer a service. That service isn’t just about managing the system; it also deals with legal aspects. Customers are asking us to partner with legal experts, and put that into our software, so they would be able to outsource all of their disclosure requirements, which is becoming more difficult to manage.”

Related articles

  1. Assets in global ETFs were $5 trillion larger than assets invested in global hedge funds at the end of Q2.

  2. Institutions can manage their bitcoin exposures in existing portfolio management and trading workflows.

  3. ETC said bringing BTCE to Cboe Europe is a logical step as demand for crypto recovers.

  4. Daily Email Feature

    From Small-Caps to Big Homes

    Former buy-side trader Tim Olsen now does real estate in Big Sky Country.

  5. Pension Fund Assets Reach Record

    DPD provides pensions schemes with the potential for yield premium and strong income stream.