Front Office

In light of the recent financial crisis, investment managers are cutting their costs as a consequence of fewer assets under management and lower revenues. Across the industry, the revenue pool has dropped significantly over the past years because of a drop in asset prices and index levels for equities and bonds, as well an investor shift to lower revenue asset classes, such as money market funds and exchange-traded funds (ETF). The industry is experiencing ever-increasing competition which poses a challenge to high management fees. To meet the strategic cost challenges posed by this environment, investment managers are cutting costs by closing funds and consolidating system architecture.

Portfolio Management

Cost challenges in portfolio management

In the increasingly competitive investment management business, the winners will be those who are able to optimise productivity by implementing investment decisions at the lowest possible cost. The challenges facing today’s portfolio manager are to provide investors with an inexpensive source of beta, to implement new investment strategies at the lowest possible cost, and to improve client satisfaction.

SimCorp Dimension reduces portfolio management costs

With SimCorp Dimension, the portfolio manager can assess, model and simulate alternative market scenarios, and receive guidance concerning the hedging and immunisation strategies necessary to ensure a portfolio composition that reflects the optimum risk/return profile of a given compliance framework and overall investment strategy. Subsequently, in true STP fashion, SimCorp Dimension automatically generates the required trade orders directly from the decision-making environment.

Trading

Cost challenges in trading

Trading organisations of today are facing a more and more fragmented market with liquidity spread across exchanges, dark pools, and crossing networks. At the same time, traders are dealing with lower transaction sizes as well as high costs related to executing large orders. The challenge for the investment management organisation is to strike the right balance between the best trade and the least expensive manner in which to conduct it. To enable this, an operating platform which will allow companies to limit future enrolment as well as to consolidate their systems is required.

SimCorp Dimension reduces trading costs

SimCorp Dimension’s state-of-the-art investment management solution supports the full trading process and offers genuine transparency across all areas of the trading cycle in real time. Its cost-efficient platform enables flawless, timely and efficient order execution for all trades, from single orders to multiple, large-scale programs. SimCorp Dimension covers a wide range of diverse multi-currency asset classes, including equities, exchange-traded equity derivatives such as futures and options, FX and fixed income.

Compliance

Cost challenges in compliance

Asset managers can expect that increased scrutiny from regulators is likely to result in major regulatory changes and to an increase in the amount of information that must be tracked and analysed. Past experience shows that implementing regulatory changes is a costly business for asset management companies. Another consequence of the global financial crisis has been a marked tendency for investors to amend their investment mandates to reflect the changes in risk tolerance that often accompany uncertain times in the financial markets. Under these circumstances, there is a clear need for long-term strategic cost management that aims at replacing long entrenched practices with processes that will reduce labour costs and provide a cost-efficient workflow.

SimCorp Dimension reduces compliance costs

SimCorp Dimension enables management to ensure that all legal, client and mandate restrictions are observed. It provides an unparalleled level of control for the compliance officer, and supports even the most complex monitoring requirements. SimCorp Dimension allows an investment management organisation to leverage compliance as a competitive advantage and win new business from today’s more demanding investors, while also protecting the firm’s reputation.

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