Because the concept of an investment book of record (IBOR) is relatively new, firms may need to rejigger their portfolio and accounting systems in order to create an IBOR.
An investment book of record (IBOR) is a set of investment data with the primary purpose of supplying timely and accurate data to the front office of an investment manager to support the investment decision process.
Trading systems provider Fidessa has chosen a different route, which is to embed IBOR within a module its calls “Position Dynamics,” which lies outside its core Investment Management System (IMS).
“Position dynamics is our take on the problem domain around IBOR,” Richard Hooke, product director at Fidessa, told Markets Media. “We actually see the position keeping problem as being very separate from the IMS piece.”
Hooke continued, “Unlike others, we've gone down the route of saying we want something which is standalone for position keeping, that's why we're badging it as position dynamics. It's a separate product and it's linked to our IMS, but it's not dependent on it.”
BMO Global Asset Management is crafting its version of an IBOR using the SimCorp investment management system. The IBOR enables the company to analyze client portfolios faster, and share the information among investment analysts, traders, portfolio managers and executives, so that all can read from the same book of record at the same time.
“The greatest business advantage for BMO is that the IBOR provides the most up-to-date position data to drive better portfolio and trading decisions,” said Todd Healy, head of investment operations at BMO Global Asset Management, in a statement. “At all times, the IBOR contains full, accurate information on which our portfolio managers can make investment decisions and traders can trade. The risk of wrong decision-making based on incorrect data is simply too high to continue being ignored.”
Klaus Holse, CEO at SimCorp, said: “While many in the industry continue to debate the merits of the IBOR, BMO Asset Management is a step ahead and has substantiated the value of having a single book of record for the firm’s clients. The IBOR’s ability to support exposure and performance measurement in near real-time is a key differentiator for institutional asset managers who have to demonstrate the risk controls in place when pitching for new clients.”
Industry drivers towards IBOR include a desire to unite the information of multiple back office systems in large institutions; to merge information from front and back, giving a more complete picture; and to maintain an independent view of positions when back office functions are outsourced.
“There is the issue around having lots of people in an organization taking end-of-day positions from accounting systems and augmenting them to be fit for the purpose of those individuals who are working,” said Hooke. “You tend to see portfolio managers or their assistants adjusting the data that they get from the back office to add things to it.”
The same sort of activity occurs in client reporting and compliance. “Around an organization you see this enrichment data cleansing activity being performed in a very manual ad-hoc way, but duplicated across the organizations,” Hooke said.
By placing the IBOR outside of its IMS, Fidessa is acknowledging that the data required to construct an IBOR may have to be pulled from numerous systems scattered throughout the organization.
“It's very loosely coupled because we recognize that there are a number of transactional systems out there, ours included,” said Hooke. “For IBOR or for position dynamics to be truly successful, it needs to be independent of any one of those and be able to pick up events and respond to events from a whole range of transactional systems.”
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