November 30, 2010

Investment managers conclude that navigating the stricter regulatory landscape will be their biggest challenge next year, according to a survey conducted by financial software provider Linedata.

The survey – which was based on information provided by 250 people from the buy-side's front, middle, and back offices – found that 43 percent see regulation as being their biggest challenge in 2011, up from 20 percent a year earlier.

"New financial regulations will alter the competitive landscape for investment managers, with those best able to adapt to a more regulated environment most likely to succeed over the long term," said Annie Morris, the managing director of Linedata's North American division.

Maintaining client confidence finished a distant second, with 29 respondents citing that as their biggest challenge. But on the technology side, 60 percent said they'll be directing most of their IT investment next year towards improving their legacy systems, the survey said.

"Many buy-side firms recognize that their legacy systems are inadequate to support their business growth in a more regulated environment," Morris said in a statement. "We are currently seeing – and expect to see even more in 2011 – interest from the buy-side in upgrading their front, middle and back office technology. No firm wants to be leapfrogged by competitors seeking a technological edge." Meanwhile, 28 percent they'll devote most of their IT spending to upgrading compliance technology, 23 percent citied risk management systems, and 20 percent will focus on technology that can boost trading performance in 2011, the survey added.

As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced ...