Has middle-office outsourcing created demand for a new software product?

With more and more investment managers outsourcing their middle office there is a burgeoning cottage industry within IT departments dedicated to creating solutions for tracking, monitoring and managing trades sent to outsource providers. 

Traditionally Trade Processing has been the responsibility of the investment manager. Commercial solutions have been devised for confirming and matching trades with brokers and the market as well as settling trades with custodians. However, when this responsibility is passed to a third party a demand is introduced for trade management oversight and control across the Investment Manager to Outsource Provider boundary; a boundary that is tightly controlled by messaging standards and service levels.

Good solutions provide appropriate visibility and controls over the trade despatch and acknowledgement process and monitor this against outsourcer’s service levels. They allow appropriate levels of message correction and reprocessing as well as quality assurance to reduce exception handling. At a technical level the same solution is routinely required to convert internal messaging standards of order management systems to those of the outsource provider and do so quickly and with a guaranteed delivery.

Is the time right for a market solution to step forward and address this need?

Note: This opinion piece was first published by Knadel Limited prior to acquisition by Catalyst Development Limited

 

About the author

I specialise in asset management operating models; application & data strategies; and enterprise architectures. I’ve worked with UK, European and global asset management firms, pensions businesses and a variety of investment companies helping them to determine their investment systems approach or to improve their operating models, especially through the use of technology.