Quality Counts for Buy Side10.20.2011
Buy side vendor creates quality assurance program to withstand growing financial regulation.
Tending to compliance, and adapting new technology to prepare for looming regulation may be a thorn in the side for many portfolio managers, but nonetheless, have become more intertwined with the daily duties of decision makers at buy side firms.
“The world is more complex,” said Stephen Van de Wetering, chief executive of buy side service provider, Empaxis. “But, there are more computers today that can help with that complexity. There is a lot more of a focus on quality assurance when reporting performance numbers in the environment that we’re in. You want to make sure what you’re doing and leverage good technology.”
Empaxis primarily serves midsized traditional asset managers, and hedge funds with approximately one billion in management. The firm is launching a new quality assurance overlay system designed for Advent’s Axys and APX portfolio management applications on an individual per client basis. The system will focus on maintaining and verifying the accuracy of the portfolio accounting and trade reconciliation data points for existing clients.
The firm accounts for approximately $30 billion in assets under administration management across more than 200 custodians.
Citing a lack of an “off the shelf quality assurance system,” Van de Wetering noted that the system took “about two years to develop and enables us to provide our clients a high degree of certainty around the accuracy of their information. We’ve been able to systematically check data points.”
“Portfolio managers don’t usually spend a lot of time focusing on the back office, but problems crop up and portfolio managers say things look wrong,” according to Van de Wetering, highlighting the importance of accuracy.
“With new trends constantly emerging within the industry, particularly to fixed income securities purchases, it is imperative to employ a quality assurance system that detects any missing prices immediately and effectively,” Van de Wetering said. “This new system is designed to locate and address these issues that the typical quality assurance overlay system would overlook due to rapid advancements in financial technology and investment outsourcing.”