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Steps to achieve trade execution excellence

Leading global asset managers discuss

The quest for alpha is top of mind for asset managers around the world. 

Between the volatile market, fee pressures and new competitive entrants, asset managers are finding it harder to maximize returns, navigate market risk, and carve out their competitive edge. In June 2023 we gathered a group of industry specialists and SimCorp clients to explore front office challenges and opportunities. The event, "Front Office Excellence", held in Paris, featured a panel discussion with prominent asset managers responsible for over EUR 500bn Assets Under Management (AUM) each globally, and presentations from some of our technology partners.

Together, we explored the concept of the ideal operating model to achieve front office excellence. Here you can get the highlights from the event and learn how leading asset managers are addressing today’s challenges.

Want automation? These asset managers started with system consolidation

Almost all the panellists cited issues with connecting multiple systems, interfaces, and data sources. They talked about the manual and time-consuming cross-referencing needed to get all systems to work together and produce reliable data for investment decisions. Specifically, they felt that the issues integrating data between various Execution Management Systems (EMS) and Order Management Systems (OMS) was a big hinderance to execution speed and slowed them down.

Before SimCorp, we had three systems to receive trading orders, three interfaces and three data sources. This all required manual and time-consuming cross-referencing.

On a positive note, the panellists shared how this situation improved once they successfully implemented SimCorp, which they referred to as their “backbone system”, providing them with “one source of truth”. That means they get a complete and up-to-date view of their investment performance across all asset classes. They built their front office ecosystem with SimCorp as the foundation, adding plugins where needed. This approach allowed them to eliminate manual excel-based processes and ad hoc requests. The seamless integration of accounting information (ABOR) into the Investment Book of Records (IBOR) allows them to monitor accounting and P&L figures in near real time. It also provides their portfolio managers with essential information to make well-informed investment decisions and achieve their targeted P&L results.

Reducing steps to execute a trade

The participants highlighted the importance of having a single system across different geographical locations, to ensure consistent processes and execution of orders. Here SimCorp's connectivity with various trading platforms plays a crucial role in achieving this.

Automation was stressed as key in trade execution. The speakers had a goal of reducing the number of clicks required to execute a trade and achieve one-touch execution. SimCorp's automation and real-time connection with TS Imagine helped streamline their trading process.

SimCorp's automation and real-time connection with TS Imagine really helped minimize the number of clicks required to execute a trade, streamlining our trading process.

The future front office and tech innovation

Looking ahead, the panellists shared their vision for the future of the front office and how tech will influence its evolution. They emphasized the importance of interoperability, speed, and liquidity search in trading screens, as well as addressing regulatory requirements and managing simulations for better investment decision-making.

Also of significance is ESG management and execution, favoring counterparties that prioritize sustainability efforts. There is a need for trusted and accessible data to enable automation and the incorporation of machine learning into the wider ecosystem. Similarly, they stressed the importance of APIs and the standardization of order executions to reduce the need for dedicated comments field and facilitate seamless information sharing.

Benefits of open ecosystem

The asset managers on the panel make use of SimCorp’s open ecosystem with five integration partners combined. SimCorp’s partners, Axioma, a leading global provider of multi-asset class factor risk models, portfolio construction tools and enterprise risk solutions, and TS Imagine, an execution management system (EMS) provider also took part in the event. Both talked about the advantages of an open ecosystem – especially cost and time savings, thanks to seamless integration. Most recently, Hassana Investment Company entered into a strategic partnership with SimCorp to utilize our investment management platform, which includes the enterprise risk management system from Axioma. Hassana saw the strength of the end-to-end platform, one that allows them to future-proof their investment management capabilities.

The key to a more efficient high-performing front office

In summary, achieving front office excellence requires addressing challenges such as system and data integration, risk management and trade automation. With SimCorp serving as the tech backbone to the front office ecosystem and providing a single source of truth, asset managers are able to reduce steps to trade execution, increase overall automation of processes and efficiency of workflows, consolidate systems, and manage larger data volumes. For them using SimCorp in the front office enhanced their capabilities and allowed them to improve operations.

If you want to talk about improving your portfolio management and trading, reach out here.

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