01.24.2012

Traders Question Systems

01.24.2012
Terry Flanagan

Buy-side solutions provider uncovers distrust amongst investors and traders.

A recent survey of buy-side market participants reveal that the buy-side is not very confident about the systems they use to implement trading and investment decisions.

The survey, conducted by SimCorp, a global buy-side solutions provider polled nearly 100 unnamed executives from 50 buy-side firms across North America.

Among the findings, “more than over 40% are not confident that the data they are receiving from disparate systems such as order management systems, accounting, performance and risk systems, is consistent and of high quality.” Nearly 70% of the polled feel believe that reconciling data between disparate systems and sources can be a difficult, and expensive task.

“Improving data quality does not have to be rooted in a long and expensive enterprise data management undertaking,” said David Kubersky, managing director at SimCorp North America.

Yet of course, those who have integrated trading systems across the asset classes they trade and invest will naturally have more reassurance.

“Investment managers that have adopted core multi-asset class investment accounting systems have a distinct advantage with data quality, as position data is already consolidated in a single repository across all instrument classes,” Kubersky said.

Apart from data quality, firms are most concerned with timing of which they receive information, such as post trade settlement, and calculating risk reports. Approximately 22% of respondents indicated that it would take days to generate a report calculating their firm’s exposure/performance across all holdings, which largely included specifications about derivatives use. Another nearly eight percent responded that such reports could take weeks to generate.

According to the survey results, 40% of buy-side firms are “making investment decisions based on poor quality data and nearly 30% do not have a near-real time view into their exposure, making it impossible for these firms to be agile and respond to shifting market dynamics,” said Matt Samelson, principal at Woodbine Associates, a consultancy which also aggregated the survey’s results.

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