Buy Side Considers IBOR to Consolidate Real-Time Positions

Two-thirds of buy-side participants see the need for more timely and accurate data as the main driver for considering an integrated IBOR, according to a Charles River survey

The concept of a centralized Investment Book of Record or IBOR system is starting to gain interest on the buy side, according to several software developers.

Today, Charles River announced the results of an IBOR business drivers survey conducted last week with 350-plus buy-side participants during a webinar. Over two-thirds (69 percent) acknowledged the demand for more timely and accurate data for front-office activities as the main reason for considering an integrated IBOR.

“Investment firms are taking a closer look at how centralized IBOR can increase accuracy and efficiencies in the front office,” comments Tom Driscoll, global managing director, in the release. “Eliminating dependency on data from back-office systems ensures that positions are as up-to-date as possible, allowing portfolio managers and traders to be more productive, and make better decisions throughout the trading day.”

To tap into the demand, some of the same software providers have developed IBOR solutions. Charles River recently unveiled a new IBOR offering that integrates real-time positions, corporate actions and reconciliation from back-office systems in the Charles River Investment Management Solution Version 9.2 series.

The need for tighter integration between front and middle-office functions was indicated by 42 percent of buy side in the Charles River survey. The survey asked participants to identify one or more business drivers guiding their interest in IBOR solutions. Here are other key findings:

• 42% indicated the need for tighter integration between front-and middle-office functions.

• 37% cited the consolidation of multiple platforms

• 22% pointed to needing to feed data to multiple front-office systems

• 16% cited the increase in outsourcing of operations as a reason for consolidating positions into IBOR.

Consolidating Multiple Systems

Buy-side firms that have multiple front-end trading systems are expressing interest in IBOR, said Robert Leaper, head of business development for North America at DST Global Systems in a recent interview in New York.

For example, firms that have multiple trading systems such as Charles River, Eze Castle, BlackRock and Bloomberg, can bring the feeds into IBOR to create a consolidated view of their positions. These trades are executed but not confirmed. “We can take positions in and see your exposure to issuers and counterparties,” said Leaper. DST’s Anova solution has products for post-trade investment data management, performance measurement, and client reporting. IBOR.

Leaper cited a case where a firm is using the same trading system but has three different versions for different regions. “It’s not an uncommon problem to have multiple regions with different systems,” noted Leaper. In another scenario, a client has four different accounting systems. It can bring in a back-office accounting feed into IBOR as well.

A centralized IBOR offering is defined a as a real-time position keeping record that provides up-to-date information about current, projected and historical positions and cash, explains SimCorp Strategy Lab, a private research institutions, sponsored by investment management tech provider SimCorp, which released a new whitepaper today. The whitepaper contends that IBOR is essential in today’s trading environment.

For instance, firms that operate on disparate systems across multiple providers, or with parts of their operations outsourced often will have a difficult time gaining an accurate overview of available positions and investible cash, states SymCorp Strategy Lab.

One of the key attributes of IBOR is that it gives quicker access to a consolidated view of data across positions in different asset classes, which is important given regulatory demands for posting collateral.

“Without accurate real-time position-keeping across all asset classes and covering events such as collateral, the front-office will often be forced to spend valuable time reconciling and keeping own position records, though still facing the risk of wrong decision making and non-optimal use of assets,” commented Marc Schröter, Head of SimCorp Strategic Research and one of the contributors to the paper, in a statement. “An IBOR presents a ‘single version of the truth’ which gives firms the critical and accurate overview essential to maintaining a competitive edge and managing risk.”

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio