Integrating New Managers

Terry Flanagan

For institutional asset-management firms, bringing newly affiliated managers under the corporate umbrella is fraught with challenges, including geographic location, processes and data needs. Decisions need to be made as to how much integration will take place with the new managers. Adjusting the process of the new managers to fit within the framework of the organization can be a challenge as well.

BMO Global Asset Management has approached this in a few different models, according to Todd Healy, vice president and head of investment operations.

“One is full integration,” Healy told Markets Media. “Another is partial integration, where the back office and middle office are integrated but front office is unchanged. The third approach is to continue to let the managers run as an independent boutique.”

The use of transactional and position data allows quick and easy compliance with Emir, MiFID2 and other regulations that require rapid access to this type of data.

Additionally, Investment Book of Record (IBOR) serves as the forward-looking view of a portfolio, in contrast to Accounting Book of Record, which provides a historical view. Having a view that helps understand various risk factors based on future events helps investment professionals arrive at better investment decisions.

IBOR needs to incorporate the latest data from all systems involved in the lifecycle of a trade and across all asset classes, Bill Blythe, global business development director at Gresham Computing, said in a blog posting. This includes trading and risk analytics systems across the front and middle office, as well as post-trade compliance, accounting, collateral management, cash management, settlement and custody systems across the middle and back offices.

From an operational perspective, an IBOR, which provides a “single version of the truth” for a company’s asset holdings, is of great benefit for integrating new managers into a company’s framework.

“With an IBOR, we are able to analyze client portfolios faster, and share the information expediently amongst our investment analysts, traders, portfolio managers and executives. All of us can read from the same book of record at the same time,” Healy said. “This is huge – it allows us to make better investment decisions for our clients. Without the IBOR, portfolio managers would have to produce more accurate figures manually, an absurd use of their time.”

Investment operations are very data dependent, he added. “The value that we add is providing consistent, timely and trustworthy data to our portfolio managers and traders.”

Technology plays a significant role in contributing to efficiency and effectively managing assets. BMO has an IBOR approach to leverage technology and operational process. “This has allowed us to keep costs down while providing a better level of service to our internal and external clients,” Healy said.

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