SimCorp’s flagship offering, Dimension, continues to sweep all before it in the IBOR and portfolio accounting categories in the annual BST Awards, winning both categories again comfortably. Victor Anderson speaks to Marc Schröter about the reasons for the platform’s considerable buy-side success, the importance of delivering reliable and transparent position-level data to the front office, and the most acute aspects of regulatory compliance the firm is seeing with its buy-side clients.
SimCorp won two categories at this year’s BST Awards: best IBOR and best portfolio accounting platform, thanks to the Dimension platform. What aspects of Dimension do you believe sets it apart from an already saturated market?
Marc Schröter, SVP of product management, SimCorp: In this new era of investment management, competing effectively requires efficiency and speed. SimCorp Dimension continues to evolve with this in mind, providing the buy side with one of the most automated front-to-back solutions in the market. Accessing real-time investment processes, together with the scalability required to handle changing operational and data needs makes it a natural fit for many buy-side firms.
As the industry continues to adopt multi-asset strategies, operating on a unified platform that is underpinned by an integrated investment book of record (IBOR) and accounting book of record (ABOR) to access a range of asset classes is becoming an attractive proposition. In real terms, this dual functionality minimizes reconciliation and can deliver faster products to market, to meet investor interest in new instruments. Fundamentally, SimCorp Dimension delivers the flexibility many firms desire and the competitive edge they need to thrive.
What are the key challenges facing SimCorp’s buy-side clients in terms of them delivering transparent and accurate data to the front office in a timely manner?
Schröter: As market data continues to increase in volume and complexity, so too does the investment lifecycle. For many firms operating on over-burdened best-of-breed and legacy technology, the limitations are plenty and the challenges even more so. Manual reconciliation and data errors continue to plague many in the front office. This is not news of course; many firms use Excel workarounds to eliminate errors and bridge gaps in data lineage.
But in today’s low-margin, low-interest rate world, it is argued that talented front-office managers should be spending less time on laborious tasks and instead be concentrating on alpha generation. There is also the issue of accessing real-time data in many front offices, which prevents portfolio managers from making fully informed investment decisions. A core investment platform, with a single and timely source of data, can provide accurate and real-time cash and positions data to best support the front office.
What’s on the horizon for SimCorp for 2018 bearing in mind that we will soon be part of the new Mifid II dispensation? What are the key areas that SimCorp will be focusing on?
Schröter: Regulations coming into force in 2018 all feature a key theme: transparency. As the impact of Mifid II and BCBS-Iosco begin to flow into the front office, SimCorp is focusing on bringing further transparency, through tighter integration. By embedding much of the data, workflows and analytics from the middle and back offices, the front office will gain the full investment picture that they now need, and can optimize trading decisions, by accessing a richer data set.
As firms continue to battle with the pressure of data management, amidst a heavily cost-controlled environment, we will be looking at enhancing our IBOR in relation to the whole data story. This will encompass data in, data processing along the investment value chain, and data warehousing and reporting, in order to provide clients with a cost-efficient and operationally efficient solution, from start to finish.
Finally, our long-term commitment to alternative investments will see new instruments such as private equity, real estate and infrastructure included in Dimension. According to recent Prequin figures, SimCorp clients manage around $1.5 trillion in alternatives (representing 20-25% of total AUM), so this is a big opportunity in the market. This year, we worked with PKA, one of Denmark’s largest pension funds, to introduce the new Private Debt module into SimCorp Dimension, which was received positively.
What aspects of Mifid II compliance does SimCorp believe are causing the biggest headaches for its buy-side clients, and how is it addressing those needs?
Schröter: Along with research unbundling, transaction reporting is a big challenge for the buy side. Though not new to asset managers, being a feature in both EMIR and Dodd Frank, the Mifid II requirement is to provide 65 fields of data under T+1. This is estimated to affect approximately 90% of all trading. To make this change as painless as possible, SimCorp is working closely with clients to address tools and processes in SimCorp Dimension, including transaction reporting, post-trade transparency and related workflows.
It’s a trio of problems: Mifid II’s data problem; blockchain projects stalled; and data quality issues for machine learning.Subscribe to Weekly Wrap emails