A New View of Investment Operations

Terry Flanagan

Investment operations are a focal point for buy-side firms as companies try to get ahead of the curve with their accounting, client reporting and reconciliations.

The theme of an outsourced service provider is resonating as asset managers seek to free up precious IT resources for mission-critical functions.

“Consultants and clients are telling us they prefer standard platforms from vendors as opposed to customized solutions, and that they have learned their lesson from trying to build the ‘perfect’ model,” said Mal Cullen, CEO of Eagle Investment Systems, a subsidiary of BNY Mellon that provides data management, investment accounting and performance measurement systems. “They feel much better going with an offering that is more standardized to avoid the risk of cost of upgrade, cost of ownership, and time to market.”

Eagle Investment Systems’ buy-side clients, who include traditional asset management companies, sovereign wealth funds, hedge funds and wealth managers, run the gamut from on-premises installed software to a fully outsourced model. About half of its clients are accessing services via Eagle Access Secure Private Cloud, Cullen says.

Mal Cullen, Eagle Investment Systems

Mal Cullen, Eagle Investment Systems

“We provide co-sourcing to clients on top of Eagle Access,” he said. “That’s where organizations don’t want to take the leap to a full outsourced model yet, but they want to try and get at some of the day-to-day operational aspects of their business which are really not competitive differentiators for them. Whether it’s managing reference data, pricing, or reconciliations, there are components of the business that they look to co-source.”

He added, “People like the fact that they have can make decisions not only for today, but have flexibility to move back and forth along that continuum in the future.”

The need for an Investment Book of Record (IBOR) is being driven by heightened risk, globalization, and increased demand for governance and transparency.

Eagle Investment Systems takes a data-centric approach to IBOR, with a focus not only on collecting the data, but ensuring that it’s accurate and timely.

“It all starts with getting control over the data, being able to integrate both legacy platforms and new systems together,” said Cullen. “IBOR is really about a continual improvement of that data. In some respects we address IBORs as a data management exercise. That’s been our core offering for years. We also have the advantage of having an integrated event-driven, almost real-time accounting platform that’s coupled with our data management solutions for firms that need to look at a legacy accounting replacement as part of an IBOR solution.”

In a white paper, Eagle Investment Systems outlines how the benefits of an IBOR can be extended to enable firms to build a consolidated ‘true’ view of their performance results, exposure and analysis; effectively producing a Performance Book of Record (PBOR).

The paper highlights a number of guiding principles for firms looking to developing a PBOR, including ensuring it supports multiple sources of data, which are traceable back to the original source, and flexible error handling and data validation tools that enable exception-only workflow monitoring.

“Many investment firms are finding it increasingly difficult and time-consuming to answer the questions being asked by regulators, clients and senior management teams due to their limited performance system’s capabilities,” said Rich Mailhos, product manager at Eagle Investment Systems.

Cullen said that IBOR means different things to different people, with some viewing it as an accounting issue, some as a data issue, and some as a front office issue. RFPs are being issued for IBOR for some or all of these requirements, or what Cullen terms the “golden IBOR.”

“We’ve had a lot of interest from our client base in IBOR-type initiatives,” he said. “It’s just interesting that they really have a different spectrum of solutions that they’re looking for.”

Cullen recently assumed the post of CEO after having served as head of Americas and global head of Eagle Access. As CEO, he assumes responsibility for R&D, finance and operations, in addition to his previous responsibilities.

His priorities are on building momentum for the business, which has experienced double-digit growth over the past eight years, and on new product development. “We believe that innovation is essential for us to continue to remain market leaders,” he said. “We’re releasing a new version of our software in 2015 that will contain the latest features and functions to meet the needs of our global client base.”

Featured image via alarus/Dollar Photo Club

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