InvestOps Europe 2019

17 - 18 September, 2019

London

44 (0) 207 368 9445



8:30 - Inspirational Keynote: Assessing the top trends in finance: How can investment operations best collaborate with the rest of the value chain to drive transformation?

  • Marsland says the industry trends include data challenges, technology, managing more complicated portfolios, the need for collaboration, changing skills in the industry and the active vs passive debate and how that is increasing complexity.

  • Increasingly complex portfolios. Asset managers have more and more complicated portfolios and many of them need different things from before, outside of traditional equities and fixed income. Newer portfolios, tend to have global, esoteric assets within them and that in turn creates complexity particularly in cash management. Modern global portfolio could be a variety of different shapes.

  • The industry needs to be more aware of the data that is out there, needing to incorporate that data out there into investment process. The real challenges are around the governance, good quality ownership and the ability to transform that data for different needs. Marsland said “If you look at the trading world, the FIX standards have encouraged a diversity of trading tools out there. Could be the case further down operating model where the standards are there.” The industry needs to apply technology to this solution, but you need to be careful you are not automating bad processes.

  • The buy-side needs to deal with different third parties - prime brokers, swap providers, banks etc. that work in a different way. More of the info the buy-side needs to run on a portfolio is needed to run further upstream in the investment process. One is the investment book of record where you need to know with absolute certainty what is in your portfolio today.

  • Collaboration – not just in terms of sitting down and talking with each other, but speed of change and being agile means the need for joining together.

9:30 - Buy Side Leader Interview: Establishing the buy side wish list: What are the gaps in the current front-to-back cross-asset solution provider space that need bridging to meet current requirements?

  • The chief operating officer for Man Group argued that the idea of a one-stop solution for the buy-side does not actually exist. Rather, they have been focused on breaking down the operating models, so they can find the right solution for individual components. He argued a front-to-back solution is a framework of where they can identify individual solutions - whether that is Fintech, or outsourcing or tech solution provider.

  • Meanwhile, the panel identified that buy-side collaboration with technology providers has improved significantly, and there are some very applicable and genuine solutions in the pipeline. However, there will most likely not be a one-stop-shop solution.

  • One solution which will be very compelling for the buy-side, one panelists argued, is a shared platform service that can use APIs and handle cloud technology. An infrastructure based on a flexible data architecture, that can utilise the concept of an app store, which is all integrated on a common data platform will appeal very much to the buy-side.

  • The buy-side need a platform that can provide the underlying engine and data that can be plugged into many different operational segments. The panellist suggested the requirement to uplift every single system is something that is a huge resource drain from a time and team perspective. The need for a common platform and a common utility is something that is the way forward.

9:50 - Panel: Smart strategic decisions: How are players from the rest of the value chain innovating to help with the buy side wish list and overcome increased complexity in their business demands?

  • If the industry can collaborate, then there can be efficiencies and solutions, however nobody wants to be the first in. Perhaps a group where tech companies and industry bodies bring the asset management industry together there can be solutions around data, automation and blockchain. Despite there being no competitive pressure when it comes to post-execution, collaboration is essential moving forward.

  • What’s best for one provider throughout the supply chain might not be best for everyone. Collaboration needs to be something that’s flexible enough across the entire platform.

  • ESG is a hot topic but it means something different to everyone. From a data collection point of view, you can throw lots of data at investors, but there is no industry standard there though. Moving in that direction, but we are not there yet.

  • Innovation depends on the organisation having the willingness to change and a culture of innovation. It’s harder for larger organisations to make fast change. Innovation has to be tactical rather than completely changing processes.

  • For innovation, asset managers would like industry-wide open architecture, almost like an app store for products and where the buy-side can select which ones we want.

  • One asset manager poses the question to tech providers about whether vendors worry about custodians buying front office providers and the innovation they are working on. Broadridge responds by saying it is an example of convergence of operations and technology, but in some cases people don’t want to be tied to an individual platform. Some are good at one asset class but not good at another.

11:20 - Exclusive Guest Speaker: AI – It’s not in the future, its right here, right now: How To Ensure You Are investing in the right initiatives that add value to your Investment Operations and make commercial sense

  • There is a lot of work in AI tech looking at the the thought behind text generation and how words are said. What most of the work that is being done today in terms of tactical AI is looking at the ability to understand concepts and feelings in our journey towards automation. We might be two to three years away from realising this, but the impact on businesses will be felt over next five years.

  • China want global dominance of AI by 2030. Putin recently stated whoever wins the AI race will rule the world, so it is clear what the intentions are. The UK is fourth because of their work with universities, and with Google's Deep Mind.

  • Innovation depends on the organisation having the willingness to change and a culture of innovation. It’s harder for larger organisations to make fast change. Innovation has to be tactical rather than completely changing processes.

  • A lot of the data currently being collected is not good enough. A lot of the time the right information is not being collected, with a lot of unconcisous bias. That is impacted how AI views the data. The challenge is to find ways where the data can be differentiated, that the collection process is clean way for the AI systems that will be implemented in two to three years time.

11:50 - Political guest keynote: Progress on Brexit: 18 months on from triggering article 50 what have we learnt, and how can we expect it to impact on the global economy and investment landscape?

  • Money, regulation and people was why the UK survived previous historic events such as the World Wars to maintain its reputation as a financial centre, as proven by history.

  • There is a view that Europeans didn’t want Brexit, but now they just want to get on with it. Doesn’t matter too much to them if Britain stays or goes. However, the US thinks that Europe will probably suffer more than the UK.

  • Once Brexit negotiations are over, there’s a belief that May could be ‘ousted’, unless there is a lot to discuss following a deal. Speaker believed she should get a majority vote to stay in though.

  • The agreement on how much we should pay is agreed, NI border is supposedly agreed, citizens’ rights have been kicked further down the track, and all the agreements fail if nothing is agreed. So Article 50 could have the money, security and defence and a ‘fudge’ on the movement of people.

  • Referendum a possibility, whether to take May’s deal or not. No deal implications have been talked up. But speaker doesn’t think such a deal is likely. But if it did, there would be major disruption for, possibly, three years.

12:10 - Fireside Debate: Spotlight on London: Will it survive as a financial hub post Brexit and what does this mean for your role?

  • Amundi's chief compliance officer said they are facing a lot of pressure from ESMA, AMF, BaFIN to get their post-Brexit strategy in order. He said this is more of a political game to have a clear post-Brexit plan and to implement it.

  • Some firms have started moving staff from London to mainland Europe, others are leaving it late. These firms may not be able to comply in the time available. Historically, the FCA has not engaged with European regulators - European firms that moved to London were overseen by the UK government not regulators. The FCA is a rules-based organisation, and the UK government doesn’t usually comprehend this.

  • The FCA may be ready to a sign cooperation agreement very soon. Luxembourg is eager to sign with them, as well as Ireland, but winning over Italy, France, Germany is more difficult. Cooperation is not about technicality, but mostly political.

  • We will see basic entities post-Brexit - the US, a European, Chinese/Asian entity. The US and Asia will be the only truely global entities, with the euro being regional, and the UK as a competitor.

12:30 - Panel: Leveraging cutting-edge data management approaches: Which new strategies and technologies should you implement to make information your competitive advantage?

  • Aggressive standardisation is essential. When making a unique API you can guarantee you are using components that the whole industry has agreed on. FIX is a way of transferring data point-to-point and the data standard is very rich. These data standards should have evolution built into them though, you need to be able to evolve them as demands change.

  • Clients becoming more demanding about their data and the frequency they want to see it. Industry spends a lot of money sourcing and storing data, needs to come down because of fee pressures means that costs have to come down and the only way of doing so is to crack the data issue once and for all.

  • One speaker believed that overtime it will be outsourced, possibly to global custodians who offer custody, fund administration, middle-office and data solutions. Some are now adding front office technology and data providers allowing them to offer front-to-back solutions, the panellist added ‘from a strategic perspective it’s quite appealing. Buy front-to-back, back-to-front solution with data cleansed and scrubbed.”

  • Proprietary and external both bring different challenges, but small data doesn’t mean small challenges, just different ones.

16:50 - Interview: How to leverage cloud technology to transform your back-office function from an after-thought to an engine that helps fuel the business

  • What other services for the buy-side could move to the cloud? Anything where there needs to be an exchange of information. Settlements, that’s how you can speed up that part of the process.

  • Cloud services are a very different business model than people are used to. Usually when buying solutions, it’s a big investment, professional services to get going and ongoing maintenance. This service is a fixed price.

  • Onboarding is a challenge, our architecture – as you would expect – built up through a number of micro services, each one has an inbound and outbound API. How do we get data from our clients? They provide us with a daily trade file. We’re finding that compared to where we were three years ago, that onboarding task is measurably lower.

  • Standards – Rules-based solutions can be difficult for people, they want to feel like what they are doing in their firm is different and they have a USP. Better to almost provide ‘scaffolding’ where there’s a framework, but what you do in it is up to the client.

17:10 - Fireside Chat: The outlook for clearing post Brexit: What will be the implications on the clearing competition landscape and the way in which you clear your UK and EU trades going forward?

  • Some negative views on variation margin and the drags on investment companies, but it has brought about a focus and dedication to build solid collateral management systems. It has brought about a need to have flexibility and timely collateral systems.

  • Where bank and CCPs are setting up non-UK entities, you need to be aware of the whole business line, what entity you are facing, what is their risk profile etc. Have to assess the complete business of the counterparty you are contracting with post-Brexit.

  • The majority of European interest rate swaps is still in London, and there is no replacing CCP that can absorb all this in one go. New transactions might move, but existing ones may not shift.

  • Liquidity has dried up significantly in the repo market, and Brexit will make it even more fragmented. Seeing new products like cleared repo accelerating, but the big question is where new products for collateral transformation will be concentrated. Asset managers are worse off if there is no substantial repo market, and will have to shift our allocations to cash.