Deloitte

Background

A wide variety of End-to-end Investment Management & Administration solutions exist that help the users thereof to effectively operate the traditional Investment Management Life Cycle, including Strategy & Planning, Trading, Monitoring, Investment Accounting and Reporting. Probably the most challenging aspect of this industry revolves around the availability of accurate, consistent and relevant data. A variety of providers have thus also established investment reference data solutions to address this issue. Due to the rapidly changing environment, volumes and complexities, some organisations further provide end-to-end back office services to clients to reduce their own exposure to the technology and information challenges experienced in the industry. In order to effectively manage their operations and to provide the information required internally and also externally to their 'clients' for regulatory reporting, investment managers typically have to rely on a combination of these different types of solutions.

  • The Solution
    • Based on Infomet's experiences and IMI delivery at Liberty Life, discussions and cooperation with Deloitte (South Africa), we came to the conclusion that the need exists for an Investment-in-a-Box Solution that does not aim to replace the existing solution combinations, but to rather augment them in areas where they are less than effective. The following diagram indicates the specific areas that warranted focus in our opinion -

  • What does IBX do?
    • The IBX Solution takes data from a variety of sources (industry-wide or specific internal) using a set of preconfigured ETL's (sourcing protocols). This does not alleviate the raw cost of such data (e.g. Bloomberg) but does provide the ability to extract the best possible value from such cost.

      1. Our solution includes a stakeholder variant and item variant module that identifies probable and possible data duplications and inconsistencies and assists the user to resolve these - retaining such resolution rules going forward. The output of this module is a 'Master' Counterparty or Instrument record that is constituted of the most reliable information for that item that is constructed from the entire combination of available data sources (per attribute, per source ranking).
      2. The solution also contains a generic financial instrument classification module that allows the user to classify financial instruments appropriately and consistently without losing the 'classification' viewpoints taken by the original source of the data. The intention is for this to be done either internally or with ongoing support from Deloitte and Infomet subject matter experts. Where instrument classification is absent or inaccurate in the source data, the solution uses a set of 5,000 generic and specific classification rules to 'suggest' a standard classification, which is then accepted or further specified by the user - again retaining the resolution 'rule' for consistent future use. It should be noted that the system has the ability to record and maintain different subject matter opinions and interpretations for future reference purposes.
      3. Various role players have various different views and interpretations of the same information. From a compliance perspective, this becomes very specific and often confusing. In order to address this any solution must provide the ability to view the same data from a variety of different viewpoints and to have the flexibility to manage changes in these prescriptions with ease.

      4. The system allows the use specification of several benchmarks (e.g. Internal, Regulation 28, Solvency) against which information can be viewed and evaluated. These can be maintained on a 'centralised' basis by Deloitte and Infomet Subject Matter Experts. The business user merely selects the required viewpoint and the system applies the relevant parameters of that regulatory or internal benchmark view (e.g. post-trade compliant or not). Through the ability to import periodic (hourly, daily or otherwise) investment plans/orders compliance can also be monitored on a pre-trade basis).
      5. Similarly, the solution ships with the required transformation rules and mappings to be able to represent the information in the most common regulatory output formats. Again, with the ability to have these managed on a centralised basis by our experts. The generic business model architecture of the solution also ensures that different versions of these outputs (e.g. with / without rule changes) can be maintained with ease.

  • Conclusion
    • IBX therefore does not attempt to replace the back office, trading or accounting functionality of the traditional investment management systems, nor does it represent a 'golden' source of investment reference data. It serves as a tool to manage the standardisation, classification and further enrichment of investment data from these sources, whilst providing a host of expert-maintained benchmark 'overlays' and regulatory output frameworks to the business.

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