Front Office Systems and e-trading
The never-ending journey
| Date: | June 2005 |
| Author: | Clare Vincent-Silk |
| Price: | £500 to non-members of the Investit Intelligence Member service |
Front office systems replaced basic spreadsheet applications and paper processes and have grown to provide a sophisticated integrated support tool for fund managers, dealers and compliance officers. Asset managers now need a system that can support a more structured and standardised investment approach, as well as an increasingly complex and regulated marketplace.
COOs of asset management companies are still investing in front office systems, because many original expectations of these systems have not yet been met. Changes in regulation, the types of assets that need to be supported and advances in technology mean it's a never-ending journey. This report investigates what front office systems were initially expected to deliver and how many of those benefits have actually been realised. What lessons have been learned to make future implementations easier? What lies ahead?
This report gives a history of what the drivers were for implementing front office systems, and how these have changed. Importantly it sets out the benefits of a good front office system implementation and gives hands on advice on avoiding the pitfalls. There are innovative things happening in buy-side dealing that are moving in from the sell side. The report also shows how these will impact front office systems and what asset managers need to think about next.
For this research, Investit questioned over 27 UK and global fund management companies, a large number of front office system vendors, the IMA and investment banks.
Table of contents
| Management Summary | 1 | |||
| 1.0 | Introduction | 3 | ||
| 1.1 | Scope | 4 | ||
| 1.2 | Methodology | 6 | ||
| 2.0 | History and Scene Setting | 7 | ||
| 2.1 | The evolving business | 8 | ||
| 2.2 | What system support was available? | 10 | ||
| 2.3 | What were the key drivers of investment? | 11 | ||
| 2.4 | The vendors | 12 | ||
| 2.5 | The changing client market | 15 | ||
| 3.0 | Case Studies | 17 | ||
| 3.1 | Case Study 1 - Keeping Focused | 18 | ||
| 3.2 | Case Study 2 - Second Time Around | 20 | ||
| 3.3 | Case Study 3 - Partnering to Success | 22 | ||
| 3.4 | Case Study 4 - Big Change Fast | 24 | ||
| 3.5 | Case Study 5 - Introducing Derivatives | 26 | ||
| 3.6 | Case Study 6 - Problems with Data | 28 | ||
| 3.7 | Case Study 7 - Small and Nimble | 30 | ||
| 3.8 | Case Study 8 - Data Payback | 32 | ||
| 4.0 | Lessons Learned | 33 | ||
| 4.1 | Buy or build? | 34 | ||
| 4.2 | Functional lessons | 36 | ||
| 4.3 | Implementation lessons | 44 | ||
| 4.4 | Benefits and costs | 48 | ||
| 5.0 | Current Big Things | 51 | ||
| 5.1 | Alternative trading systems | 52 | ||
| 5.2 | Direct market access and algorithmic trading | 55 | ||
| 5.3 | Transaction cost analysis | 58 | ||
| 5.4 | FIX | 60 | ||
| 5.5 | Markets in financial instruments directive - MiFID | 64 | ||
| 5.6 | Outsourcing | 67 | ||
| 6.0 | Planning for the Future | 69 | ||
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