Asset Management

12:58 PM
Marc J. Firenze
Marc J. Firenze
Commentary
Connect Directly
LinkedIn
RSS
E-Mail
50%
50%

The Pursuit of IBOR

Achieving an accurate and consistent IBOR can be elusive for some investment management firms, writes Marc Firenze, CTO at Eagle Investment Systems.

In recent years, investment managers have increasingly looked to develop one consistent, accurate and up-to-date overview of a company’s assets across all of its businesses throughout the day. This has led to the development of the concept of an Investment Book of Record (IBOR).

Marc Firenze, Eagle Investment Systems
Marc Firenze, Eagle Investment Systems
A renewed focus on IBOR is being driven by a number of factors. Investment managers are faced with an ever-increasing amount of information to process and consolidate, from a wider range of complex instruments. This is coupled with a regulatory landscape that is shifting towards greater transparency and accountability.

The most important driver, however, comes from the need for a competitive advantage. The front-office is increasingly looking at the accuracy and timeliness of information as a way to improve the decision making process and reduce trading errors. This commercial pressure is making the development of an IBOR a priority for many firms.

In practice this can seem much more easily said than done. We recently commissioned a survey of senior executives at investment management companies and asset managers to look at their current practices around IBOR and portfolio management and were surprised to find that one in three said an IBOR was ‘out of reach’ for their organization.

A truly accurate and consistent IBOR remains elusive for so many, and as such reveals a fundamental data management issue investment managers are facing. Many firms find themselves – more through circumstance than design – with inflexible portfolio management infrastructures that hinder – or prevent entirely – the ability to have a timely and consolidated view of their assets.

Often these firms have multiple accounting and processing systems in place that have been inherited through acquisitions or built on top of their existing portfolio management system as they’ve entered new asset classes or territories. Over half of the investment firms surveyed in our study are using anywhere from two to eight systems from which to compile their IBOR. As well as making the process extremely complicated, using so many systems increases the risk of inaccurate reporting.

Factor into this that many firms outsource their middle and back office functions, leaving access to accounting information one step further removed from the front-office, and it’s easy to understand why creating an IBOR that meets the needs of the front-office can be such a challenge.

A successful IBOR delivery has enterprise data management (EDM) at its core. A data-centric approach, with a single, consolidated view of all assets with the level of detail required with data loaded directly from multiple best-of-breed systems, is the optimum way to achieve this. This single source of data helps firms make investment business decisions providing access to the underlying, granular details they need. Furthermore, because data is not being created, there is less need for reconciliation creating more accurate data available more immediately.

The IBOR is not a new concept, but it’s one that the industry has latched onto recently. The benefits are access to timely and accurate data in the decision-making process, and in this time of increased competition, mitigating the risks associated with data. In turn, this is leading firms to ask themselves searching questions about their data management practices.

—Marc Firenze is chief technology officer at Eagle Investment Systems. Firenze drives the software, technology and architecture decisions across Eagle's investment management suite.

As Chief Technology Officer of Eagle Investment Systems , Marc Firenze drives the software, technology, and architecture decisions across Eagle's investment management suite and ensures that development directly supports the firm's corporate vision. With more than 20 ... View Full Bio
Comment  | 
Print  | 
More Insights
More Commentary
The Perks of 'SmartSourcing' Shared Services in Financial Industry
A breadth of vital but undifferentiated business processes are still being replicated across the industry. They are all candidates for centralization.
Managing Social Media Risk Strategy: Technology Can Only Go So Far
Advanced analytical technologies are an important part of a social media risk management strategy, an Accenture report says, but the technology must be balanced with training and procedures.
Cross-Asset Universal Product Identifier: The Solution the Industry Is Looking For?
A UPI will enable a holistic approach to identifying all trades and positions. While such an idea sounds great in theory, historical attempts at achieving global agreement have fallen short.
Application Whitelisting Increasingly Applied in Cyber Security
Innovations in application whitelisting solutions are helping IT teams more efficiently and flexibly automate and manage lists of approved applications.
Register for Wall Street & Technology Newsletters
White Papers
Current Issue
Wall Street & Technology - Elite 8, October 2014
The in-depth profiles of this year's Elite 8 honorees focus on leadership, talent recruitment, big data, analytics, mobile, and more.
Video
Top Quotes of the Week
Top Quotes of the Week
It wasn't all bad luck for the capital markets this week: Hedge funds had a decent first quarter despite a slowdown in jobs numbers, BlackRock might be heading into new territory as hedge fund managers take a hard look at their counterparties, and the head of the IMF didn't pull any punches when assessing today's global economy. At least we can admire the nice weather and some of the best quotes of the week.