As part of an effort to increase operational efficiency through straight-through processing, Sectoral Asset Management (S.A.M.) is moving to a Web-based environment. The Montreal-based boutique fund manager is rolling out a range of functionality from Toronto-based Financial Models Company's FMCSuite. The project comes on the back of S.A.M.'s migration to the vendor's FMCNet2 Web-based global trade network, which S.A.M. accesses on an application service provider (ASP) basis.
The next step in the STP initiative is to implement Web versions of FMCPacer, a portfolio management and accounting system, and FMCVertex. The deployments are planned for the third or fourth quarter, according to Sylvain Chaput, technology officer with S.A.M. "Everything we have will then be on the FMCSuite Web mode," he says.
After moving to FMCNet2 for post-trade communications last May, S.A.M. embarked on the FMCSuite project, the main element of which was implementation of FMCModel, the solution's portfolio modeling and analysis module. "Previously, we used Microsoft Excel spreadsheets for modeling, but with FMCModel we have moved to a more standardized and integrated environment and are able to eliminate all paper tickets from the managers to our trader," says Chaput. "Our managers are on the road a lot, but with this Web environment they can still process in the same way as when they are in the office. Before, they had to call or send an e-mail, so we remove a lot of risk by being able to have an electronic link."
From the time managers send an order until the settlement instruction is sent, the only information to be retyped now is the execution price, which is a big improvement on the three, four or five times a trade had to be entered previously, relates Chaput, who currently is discussing with FMC ways to receive broker executions and link them to S.A.M.'s network to remove all rekeying steps. "All the broker executions are FIX-based, but today we don't have FIX connectivity," says Chaput. "The link we need is between FIX on the broker side and our FMCNet2 environment. FMCNet has signed an agreement with Cameron Systems to use their FIX engine and are working to have FIX connectivity later this year."
The asset manager also is adding functionality to its FMCModel environment. "We are implementing the compliance module, which should be completed during April," says Chaput. "Eighty percent of our compliance will be made pre-trade instead of everything post-trade, as it is today. In addition, we will be moving all the managers' satellite Excel files into our FMCModel environment, so the managers will have just one place to work for compliance and reporting," he continues.
Going forward, Chaput hopes to use the central matching facility that has been added to the latest version of FMCNet. "Today, we are still doing local matching," he says. "Before moving to central matching, we have to have our counterparties involved, though. Most of our brokers are still on FMCNet1, so when they move to FMCNet2, we will tackle the central matching. It probably won't be this year, but in the mid-term we will start to use that."
According to Tim Lind, director, securities and investments, with Needham, Mass.-based research firm TowerGroup, there has been a resurgence in ASPs in the past 18 months. "This deal is an example of the wider trend occurring in the industry as firms such as FMC, Macgregor and Omgeo step up with ASP offerings," says Lind. "The value of the applications has increased because now they are extended beyond the asset manager to provide connectivity to their broker-dealer and custodian communities."