Defining Operations Best Practice


Date: December 2008
Author: John Robertshaw  
Price: £1750 to non-members of the Investit Intelligence service  

The brief for this research study was:
“To create a self-certification template, which would enable Intelligence members to measure the performance of their key operational processes, against the norms prevailing in the industry”

We have identified 21 key operational functions which have been decomposed into 57 operational processes. For each process we have specified key descriptive information together with statements of processing practice in increasing degrees of sophistication from ‘base’ through to ‘best’. To assist with assessing a firm’s performance, we have added a series of tests that can be applied to each process, to determine its level of sophistication.


Each operational process analysis includes an assessment of both best and current market practice, systems commonly in use, etc. Firms can compare this information to their own experience to be used for internal improvement programmes, to baseline their competence levels or possibly for presentation to clients.


We have also developed a questionnaire which when completed will give an assessment for each process in heat map format, subsequently summarised by operational process. This should result in a simple, easy to read picture of how processes compare to our classification of best practice.


As we embarked upon the research we quickly established that assessing operational processes in isolation would give a very one-dimensional, or vertical, view of operations. It would concentrate on the efficient performance of individual operational processes. We have therefore extended the analysis to address the overall challenges that the operations departments face, most specifically in the areas of control and risk management and in their preparedness to address the demands of the future.

Table of contents

1.0 Introduction 1
  1.1 Paper structure 2
  1.2 Methodology 3
2.0 Operational Processes 5
  2.1 Operational process templates explained 7
  2.2 The operational process scoring mechanism 9
  2.3 Dealing 11
  2.4 Cash & Treasury Management 15
  2.5 Trade Processing 18
  2.6 Corporate Actions 21
  2.7 Corporate Governance 26
  2.8 Securities Lending 28
  2.9 Positions Management 29
  2.10 Data Management 31
  2.11 Derivatives Administration 38
  2.12 Income Processing 42
  2.13 Investment Accounting 45
  2.14 Fund Accounting 47
  2.15 Operational Risk 49
  2.16 Compliance Monitoring 51
  2.17 Performance 52
  2.18 Supplier Management 58
  2.19 Transfer Agency 63
  2.20 Marketing 66
  2.21 Transitions 68
  2.22 Client Servicing 70
  2.23 Client Reporting 74
3.0 The Operational Control Framework 81
  3.1 Operational risk management 83
  3.2 Supplier relationship management 85
  3.3 Management reporting and process controls 87
  3.4 Resource management and development 88
  3.5 Company security management 89
  3.6 Disaster standby and business continuity management 90

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