Regulation, automation and financial crime compliance are top priorities for the investment management community
New paper from SWIFT highlights operational challenges impacting the buy-side in 2015.
London, 17 March 2015 - New independent research commissioned by SWIFT reveals that regulation, automation and financial crime compliance initiatives are top priorities for the investment management community in 2015. The findings of the survey, which are captured in a paper entitled Operational Challenges Facing Investment Managers in 2015, assesses the current and future operational needs of the buy-side with a view to determining potential solutions around automation, standardisation and collaboration.
The survey was conducted in the spring and summer of 2014 with six of the ten largest investment management firms and their counterparts at more than 30 investment management houses from around the world.
The survey's results identify the following eight key issues facing investment managers for the year ahead:
- The heavy impact of regulation on investment managers - Managing regulatory reporting and compliance is taking up considerable time and effort. As a result, less time is available to innovate and respond to new clients.
- Specific pressure resulting from KYC, AML and sanctions screening due diligence - Investment managers are looking for utility solutions to provide more efficient sources of reliable data.
- Mitigating outsourcing risks - Investors and regulators are encouraging investment managers to focus on business continuity and risk mitigation, especially in the case of outsourced services.
- Inefficiencies in corporate actions processing - There is clear appetite for a single, authoritative source of reliable corporate actions information (perhaps as a shared utility), and greater demand for enforceable rules binding issuers.
- The growing importance of collateral management - Post-crisis regulation is prompting investment managers to address the cost and risk of managing collateral.
- A lack of standardisation hampering post-trade efficiency - Communication between counterparties could be more efficient if there was a greater use of message standards.
- A lack of standardisation in post-trade processing of transactions - The processing of some asset classes (notably OTC derivatives, but also repos, collateral movements, stock loan and investment fund settlement and registration) continues to be impeded by low levels of standardisation.
- New forms of fund distribution support are needed - Investment managers face challenges in distributing an expanding range of fund types into a number of geographical markets through a growing range of infrastructures adopted by investors.
"This research into the investment management industry shows that there are visible pain points that operations executives will need to address in 2015 and beyond," says Fabian Vandenreydt, Head of Markets Management, Innotribe and the SWIFT Institute at SWIFT. "With 90% of all assets under management connected to the network, SWIFT is uniquely placed to help the investment management industry address these evolving market challenges. Collaboration is key and SWIFT is ready to help facilitate an industry-wide movement towards increased efficiency and standardisation for all market participants; lowering costs and improving visibility on cash and assets."
SWIFT commissioned the survey to understand the operational challenges facing the sector and encourage future collaboration to find shared solutions.
SWIFT is a member-owned cooperative that provides the communications platform, products and services to connect more than 10,800 banking organisations, securities institutions and corporate customers in over 200 countries and territories. SWIFT enables its users to exchange automated, standardised financial information securely and reliably, thereby lowering costs, reducing operational risk and eliminating operational inefficiencies. SWIFT also brings the financial community together to work collaboratively to shape market practice, define standards and debate issues of mutual interest.
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