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The Shifting Sands of the Investment Management Space

Stephen Quinn

The Investment Management space is awash with innovation, regulation and general technological evolution and it all appears to be coming to a head over the next 12 to 18 months. What follows will attempt to set the landscape and paint a clearer picture of the marketplace and cut through some of the fog.

First up is the outgoing Barclays POINT Risk and Performance system and what will replace it. It’s sale to Bloomberg is projected and targeted for Q1 2018 so time is fast running out to find an equally affordable and efficient replacement before it is decommissioned for good. The front-runners for taking over that market share are Bloomberg PORT, which is the reason behind their purchase of the successful POINT system and part of their appeal is that they will provide on-going support to the outgoing system pre-end date whilst not providing the best service themselves. The other option is Blackrock Aladdin, a black box solution with the capabilities to stretch further across the business.

Next up is impending MiFID II go-date, probably the most talked about topic of the last 18 months and still shrouded in ambiguity and confusion. Having already been delayed by one year, the new date of January 2018 is fast approaching and there is still bewilderment from the Buy-side around the interpretation of the regulations and also around research costs and who should soak up the cost – should it be passed onto investors or will they be expected to cover the costs themselves? Many Asset Managers who operate on an outsource model via Fund Administrators have looked to pass some of the transaction reporting needs onto the Fund Administrators.

Sticking with regulations and the EMIR deadline has been pushed to 1st November 2017 which will mainly affect collateral and commissions.

All these impending regulations and the rapid pace at which technology is evolving has meant that a number of third party applications, now critical for business, are in desperate need of various upgrades and enhancements if there are not to be left behind. The challenge here lies with the demand of specialist resources leaving the dilemma: go to the vendors and pay a premium (if you can afford it)? Or, try and source a contractor in a fiercely competitive market? Both have benefits but can come at a price, especially given the quickly diminishing pool of quality resources.

The Packaged Retail and Insurance based Investment Products (or PRIIPS), similar to MiFID II, had its delivery date pushed back to Q1 2018. Not dissimilar to the KiiD document meant for UCITS-based Funds, this new documenting system will be an essential factsheet, providing investors with current information to make an informed decision prior to investing. Companies that operate a strong KiiD documenting system already should find the transition fairly painless and benefit from a much smoother operation once implemented.

GDPR is another regulatory initiative set to take hold in early 2018 as the data landscape faces its first major shake-up. With huge consequences set for those that ignore it and a complete overhaul of how you collect and then store personal data, it will be interesting to see how the industry will adapt and the opportunities that may emerge as a result.

This is just a snippet of what’s ahead and the chances are, it will change again before long. Like shifting sands, the ones that will do well are those that embrace the change early and prepare accordingly. To discuss how set your company is for the upcoming implementations, or to have a conversation about how we can help (it’s not too late!) give me a call on 0203 5877007 or email me on Stephen.quinn@harringtonstarr.com