By Terry Flanagan

Regulation Tops List of Concerns for ‘12

Investment management firms cite regulation and compliance as IT priorities.

Regulatory concerns are stacking up as the number one issue facing asset management firms in 2012.

According to Linedata’s Annual Global Investment Management Survey, 25% of respondents consider regulation to be their top or second priority; ahead even of investment performance which rated as their second greatest concern.

“There are 14 major regulations asset management firms  are facing right now; all are in different states of proposal and implementation,” Gavin Little-Gill, global head of asset management product strategy at Linedata, told Markets Media.

“Many of these have been pushed through hastily and asset management firms expect significant revisions over the course of the next three years,” he said. “The prospect of a repeating cycle of re-regulation  weighs heavily and is largely paralyzing the industry.”

Looking towards the future, the interviewees identified adapting to new regulatory regimes as their greatest challenge in 2012.

Linedata surveyed 159 investment management professionals over the course of six weeks in September- November 2011, during Linedata Exchange London, New York, Hong Kong and Singapore.

Trading and other front office applications were the main IT priorities of the largest single group of respondents at 27%; risk management and compliance combined as a significant 33%.

The investment management industry is weighing an avalanche of regulatory proposals. “The survey results clearly illustrate apprehension over coming regulations and their impact on business,” Little-Gill said.

This explains one significant shift in IT priorities: whereas in 2010, it was about improving legacy systems, in 2011 priorities shifted towards managing risk.

“Asset managers need a better understanding of the entire trade lifecycle, a more comprehensive insight into risk and, generally, increased transparency,” Little-Gill said.

The acquisition of better front and middle office solutions are critical to managing the overall operational risk of an asset manager’s business and providing insight into the
firm’s risk exposure throughout the day.

“Asset management firms don’t need technology, they need solutions,” said Little-Gill. “Our major focus when developing the underlying technology is to build it so that it supports business solutions. Providing tightly integrated, best of breed applications results in platforms that respond to the key challenges faced by institutional and alternative asset managers.”

Related articles

  1. Upstart exchange has seen market share increase to near 4%.

  2. Goldman Sachs Asset Management’s fundamental equity business manages over $20bn in thematic equities.

  3. Data extraction and integration is the second stage of a digitization process.

  4. With Ankit Mittal, Business Change Manager, Global Trading, Schroders

  5. IIGCC and lead investors will launch a pilot with companies including BP, Eni, Repsol, Shell and Total.