Optimising Operations in Volatile Markets11.21.2022
By Julian Trostinsky, Director, Global Support & Business Development, Gresham Technologies
There has been a significant amount of volatility and uncertainty in the financial markets over the last year – this will not come as breaking news to anyone. And it doesn’t look like ending anytime soon. Financial institutions are feeling the pressure as increasing volumes are stressing their operations teams amid a major talent shortage that will only get worse.
Firms need to act and respond faster to market movements and client demands while also complying with more evolving regulations. With low to negative returns in the current environment, operations teams are also pressured to control or reduce costs and consistently show value in client service and risk reduction as firms must justify their fees, protect assets and prepare for the future.
Through all of this, buy-side firms are still struggling to gain efficiencies in a host of essential business areas. Across the industry, a lot of money is wasted on inadequate and disparate data, as well as antiquated processes often propped up by legacy systems. This can lead to considerable strain when considering the current economic volatility, leading many asset managers to change their investing patterns.
Looking for higher yields
The trend of asset managers looking to alternative asset classes in search of higher yields is not a new one. But the volatility in more vanilla assets this year, such as listed equities and sovereign bonds, has placed them in the spotlight. Indeed, US investors are circling UK private equity deals due to a falling pound, while it was recently reported that Goldman Sachs was leading a multitude of asset managers in pursuing alternative asset deals from embattled pension funds in need of greater liquidity in their portfolios. However, there is an operational issue here.
Escalating data pressures
As new assets enter the picture for an increasing number of buy-side firms, the volume of data they must consume exponentially increases. On top of that, they are finding they have to process new kinds of data. In short, data is needed faster than ever across more functions, and it’s getting more complex. Data feeds lack consistent format standards, and they’re unpredictable. Things change frequently and without warning.
Empowering operations talent
Keeping up with all the feeds, then normalising the data and distributing it across multiple functions, takes enormous resources in terms of infrastructure and staff time. The mindset shift that needs to happen for asset managers is to see the operations team as a potential for revenue generation rather than a cost.
If staff are to be empowered to focus on higher-value work that differentiates the business and uncovers opportunities to generate new revenues, they need to have the data strain and other routine tasks taken off their shoulders. This all becomes an even greater issue when one considers the current state of the jobs market. The ultra-competitive hiring environment facing the buy-side currently, amidst ‘The Great Resignation,’ is causing issues for operations teams. The talent shortage only appears to be getting worse as firms vie to fill vital positions.
Streamlining ops for better outcomes
The real issue from a back-office perspective is when you have to get more skilled staff who are already spending time on high-volume, low-value processes. While these processes are essential to the smooth running of day-to-day operations across the business, it is a waste of time and resources to have talented ops teams spending half of their days working on them. On top of this, it is likely to be a key reason that is driving people out of ops teams – to seek out more stimulating work.
This is where the value of a managed services model can be felt – as it allows teams to focus on their core business while guaranteeing that the essentials are being handled.
Ultimately, the firms that can optimise their operations for greater speed, scale, and resiliency can focus more on their core competencies. That means they will be the ones who will find opportunities during these times of economic uncertainty.
Janus Henderson traders use a broad spectrum of electronic tools to optimize the search for liquidity.
Florida CFO said ESG standards are being pushed by BlackRock for ideological reasons.
The new regime requires a new investment playbook involving more frequent portfolio changes.
DWS will hold a stake of 30% in the new company.
More than 220 investors representing $30 trillion in AUM have signed up to 'Advance.'