Asset Management (or in the financial sector "Investment Management") is the service of professionally managing securities or other assets in the name of investors (through for example UCITS) with the goal to meet benefits. Investors may be institutions (corporations, banks, etc.), and in this case we will refer to "Collective Investment" or "Fund Management", or private investors, activity referred to as "Private Banking".
Asset Management actors evolve in an environment in constant mutation: markets become truly global and faced important turbulences, regulators introduce stricter rules, more sophisticated clients require tailor-made solutions and high-level service quality, etc. These mutations need to be handled with the constant necessity to stand out from the competition.
Facing these new challenges, actors along the whole asset management chain need to bring the most adapted answer: introdution of more complex and sophisticated products or instruments, development of risk management tools, implementation of new systems, global review of processes in place, change management projects, etc.
Bringing their experience and their credentials, Finalyse consultants empower their client to achieve their objectives in a wide range of topics through the entire asset management value chain. Finalyse proposes services and solutions at all levels of the Front-To-Back line, including:
- Portfolio modelling and rebalancing
- Pre- and post-trade compliance
- Order management
- Performance measurement and attribution
- Compliance with regulations (UCITS V, AIFMD, EMIR, MiFID)
- Client, regulatory and internal reporting
- Data management
Our expertise combines knowledge in Business Intelligence, Credit Risk, Operational Risk, Financial Markets, Enterprise Wide Risk & Performance, Insurance and Back Office Processes and Project Management.
UCITS V (Undertakings in Collateral Investment in Transferable Securities)
UCITS are norms that seek to give investment managers a ‘European Passport’ to operate throughout the EU whilst ensuring appropriate investor protection and risk management practices. Since 1988, the UCITS Directive has been modified to adapt to the rapid evolution of the fund industry. UCITS IV is currently the norm but will be soon replaced by UCITS V.
The key impacts of UCITS IV & V
- Extended requirements of Risk management processes
- Implementation of the Key Investors Document
- Valuation of OTC and assets
- Extended requirements for depositaries duties and liabilities (UCITS V aimed at aligning with AIFM Directive)
- Remuneration policies
How Finalyse can help
- Expertise in risk management support activities
- Transparent, independent & auditable derivatives and structured products valuation
- Participation/Management of projects to comply with regulation requirements for depositary banks or investment managers
AIFMD (Alternative Investment Fund Managers Directive)
AIFMD established within the EU needed authorization by 22 July 2013 (or 22 July 2014 in European Union Member States that use the transitional period). This directive aims at regulating investment funds not yet covered at the EU-level by other norms such as UCITS.
In the actual financial environment, the main goals of the directive are
- to ensure a greater protection and regular & accurate information to investors
- to provide national regulators with detailed information and
- to enable AIF management to identify potential events on the market and take appropriate actions.
The regulatory framework for these funds will widely change and affect the different actors of the fund industry (managers, depositaries, administrators, etc.).
The directive gives new specifications and rules in the following topics:
- AIFM authorisation – identification of AIFM, definition of an AIF, exemptions, registration requirements, capital requirements, authorisation requirements
- Governance structure – governance principles, operational & organisational conditions, delegation, leverage
- Depositary Bank – appointments and eligibility, role and duties (safekeeping, oversight duties, etc.), liabilities, delegation
- Risk and liquidity management – permanent and independent risk management, risk management policy, assessment, monitoring and review of the risk policies, identification & measurement of the risk
- Valuation – methodology, policies, procedures, frequency, responsibility and liability of the AIFM (oversight and delegation)
- Transparency and reporting – annual report, reporting to investors, reporting to regulators
- Marketing – strategy, dual-regime, EU Marketing report
How Finalyse can help
- Expertise in risk management support activities:
- proof of independent performance of risk management (market risk, liquidity risk, counterparty risk and other risks including operational risk)
- stress testing procedures (risk and liquidity management)
- dashboard and risk profile reporting implementation
- Independent valuation of assets
- Set-up of performant reporting solutions (definition of the target data model, implementation of the agreed reporting tool, etc.)
- Project management/participation – Analysis and change implementation to comply with the regulation requirements (intervention at all levels of the investment management chain – fund managers, depository banks).
MiFID I & II and MiFIR
The Markets in Financial Instruments Directive (MiFID) and the trend towards a unified European capital markets industry is progressively changing the way market participants trade on or off exchange. Always ready to help its clients addressing new European regulations, Finalyse welcomes the directive as a new challenge to develop additional expertise and put it at the disposal of our clients. We are developing a pragmatic approach, focused on key issues such as the storage of market quotes, and the analysis of transaction costs as well as the Best Execution measurement.
The upcoming MiFID II / MiFIR resulted from an extensive consultation in the wake of the financial crisis: the goal remains the same, but additions are made to the original Directive to:
- Establish a safer, sounder, more transparent and responsible financial system
- Increase integration, efficiency and competition within the EU financial market, thus reducing costs to participants
- Create a single rule market in Europe, with a level playing field for states and participants
- Improve supervision and transparency on regulated and OTC markets (G20 commitment). Efficient valuation is a key component of such transparency.
Finalyse offers a transparent and independent valuation and risk management service for derivatives and structured products in order for you to comply to all these changes in the legal environment.
You can also find more information about this topic on the following pages:
Portfolio modelling and rebalancing
Portfolio managers need reliable and robust solutions allowing them to easily analyse and value portfolios, model trade scenarios, and generate orders. The increase in the number of clients and assets under management leads to a need to industrialise the process. Whether you are interested in designing your own internal portfolio analysis tool or selecting a package and implementing it, Finalyse consultants can put their expertise in these matters at your disposal.
Pre- and post-trade compliance
With an increasing regulatory burden and stricter risk reporting and compliance requirements, it becomes essential for firms to invest in new systems allowing for effective compliance monitoring and management. Finalyse consultants can bring you their knowledge of compliance applications and their understanding of legal, regulatory and client specific rules.
The dealing desk is a key component of an asset management firm's front office operations as it is during the execution step of the investment process that plans are turned into reality, with all the attendant real-world challenges. Finalyse can help you tackle issues such as integration of portfolio management and trading systems, confirmations and settlements, speed of execution, direct links to markets, electronic connectivity networks, brokers or market makers.
Performance measurement and attribution
Whether a portfolio is managed against a benchmark or on an absolute return basis, investment performance must periodically be evaluated to assess progress towards the achievement of investment objectives as well as to assess portfolio management skills. Performance measurement involves the calculation of the portfolio's return while performance attribution involves determining the sources of a portfolio's performance. Finalyse has experience in these two domains, it ranges from mastery of the different return computation methods and definition of equity and fixed income attribution factors to the design of performance reporting guidelines and reports and full implementation of performance and attribution packages.
Client, regulatory and internal reporting
Finalyse has a great deal of experience in the design of underlying data flows, data storage and the most effective reporting to support management decision making as well as the requirements of external stakeholders.
Drawing on their extensive knowledge of the different processes and workflows, Finalyse consultants can help address issues related to business process management and re-engineering, definition and integration of new processes and workflows into your operational systems, streamlining of existing processes and workflows, automation and straight-through-processing (STP).
Whether you are concerned with client or market data, data management is crucial for your operations. Finalyse consultants have extensive experience building comprehensive data management solutions, ranging from the design of complete data warehouses, interfaces with new data providers, including benchmark providers, to the inclusion of real-time data feeds into existing operational systems, and definition of data validation controls.