In pursuit of "IBOR"

In pursuit of “IBOR”

As the expectations of investment data quality and technology-based automation have increased in the asset management industry, alongside it has grown the need for a true Investment Book of Records (IBOR). Therefore we ask the question - what does IBOR look like, and what are the principles and practicalities in achieving this goal?

At a high-level, IBOR represents a set of investment data completely geared to the requirements of fund management. It is independent of all investment accounting-based needs, including official valuation points and otherwise.

This requirement has spawned a trend of IBOR versus ABOR data segregation. Where it was once commonly accepted to take a front office feed of data directly from an accounting system, asset managers are now demanding more from their front office data. This continues to create a strain on in-house support teams and TPAs.

Alongside the technology and architecture-related challenges, asset managers and TPA product owners are trying to define what IBOR really is. At Consalis, we believe there are a few core considerations when comparing the requirements of an accounting system:

Asset Pricing – What price basis does the asset manager require for the order management system? What are the needs of asset manager performance– does pricing need to be aligned to a benchmark provider’s?

Position-Based Data Availability – At what point will the effect of a custodian-initiated FX trade be seen in the front office system, and is that too late? Is tradeable cash showing the effect of that day’s margin calls? Are my start-of-day positions adjusted for corporate actions?

Security Static Data – Ultimate issuers & asset classifications are common ABOR gaps, and therefore common challenges.

In summary, there are clear advantages to having a segregated IBOR. However it doesn’t come for free – data duplication means data reconciliation – and some smaller firms will see the costs outweighing the benefits. Nevertheless, this particular trend shows no sign of abating, particularly for larger, more complex asset management firms that continue to invest in their architecture.

April 2015