Spending Too Much Time Managing Data? Reevaluating Your Middle Office Environment

Apr 07, 2020

| Data Management | Middle Office

With the high volume and complexity of investment products and asset types in the current volatile and uncertain market, many asset managers may be spending too much time on middle office functions, while missing opportunities to improve client relationships and focus more on core business decision-making in today’s constantly changing industry.

In a world with multitudes of data languages, formats, and mediums, there are distinct outsourcing advantages for asset managers when choosing the right middle office service provider. Some of those advantages include:

  • Immediate enhancement of middle office capabilities with a provider who performs these functions as part of their core business.
  • Better utilization of internal resources and improved investor service levels.
  • Help with daily record-keeping and reconciliation with custodians.
  • Support with investment and regulatory reporting.
  • Reduced maintenance costs and no large capital expenditures to upgrade middle office technology.

What should advisers look for to be sure their data is in the best hands? Below are three important factors to consider regarding middle office data – Translation, Transformation, and Transmission (the Three T’s).

Translation
Data can be stored and delivered using many different languages and formats including Extensible Markup Language (XML), Hypertext Markup Language 5 (HTML5), JavaScript Object Notation (JSON), American Standard Code for Information Interchange (ASCII), Microsoft Excel, and Portable Document Format (PDF). To systematically read data in various formats requires a converter or translator.

Remember that the middle office administrator you pick should be able to translate a variety of data languages, plus do it accurately and efficiently prior to transformation. An experienced administrator should have a professional team with years of industry experience working with you to ensure that the data delivered can be properly converted throughout its life cycle with little to no manual work.

Transformation
Once data has been translated, it is ready to be transformed into a new format or language depending on its destination. For example, trade data will get transformed to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network format and delivered to the designated custodians. Trade data will also need to be transformed to Structured Query Language (SQL) so it can be imported into an accounting system.

The ability to translate and transform data makes for a clear path to accurate data delivery. It also provides the foundation for ultimate flexibility when converting data into custom reporting or data feeds. Also be sure that the chosen middle office service provider can transform data from internal systems, deliver it in the chosen format, and perform analysis along with other state-of-the-art functions.

Transmission
Data should be able to be transmitted via Application Programming Interfaces (APIs), File Transfer Protocol (FTP), and email. Established APIs with all key intermediaries and vendors is important so encrypted data can be systematically transmitted back and forth between systems securely.

The ability to securely transmit data across multiple mediums ensures that the data will be delivered to its destination in the preferred, most efficient and safest manner possible. The ability to systematically retrieve, interpret, and communicate data is essential in today’s complex industry – allowing for more efficient processing, decreased risk, and additional flexibility for analysis and reporting.

Bottom Line
Data from advisers, investments firms, and asset managers should flow seamlessly throughout the life cycle. In the end, look for an outsourced middle office team with data-driven technology that is flexible enough to meet the most enhanced and unique system requirements.

The true value-add in today’s challenging financial environment for asset managers is not only evaluating the benefits of using an outsourced middle office provider, but also being able to share some of the operational risks with a professional, seasoned team that can be relied upon to get the job done. Most importantly, outsourcing middle office functions allows asset managers to focus 100 percent of their time on core business functions and client investment strategies that help grow the business.

 

The centerpiece of the middle office outsourcing solution from Ultimus Fund Solutions is an advanced central data repository that stores all investment data (security master, transactions, holdings, tax lots, daily P&L), as well as third-party market data including analytics, prices, corporate actions and benchmarks. The Ultimus team has extensive experience integrating this data with many different front-office technologies and can also make it available to investors through web portals.

Additionally, Ultimus has recently developed new uSUITE applications internally to help streamline processes by automating manual work, alerting users of exceptions, and providing dashboards/user interfaces for full transparency. The result is increased efficiency, transparency, and reduced risk.

Institutional Strength | Boutique Service

The Ultimus Group, LLC is an Equal Opportunity Employer. All rights reserved.

DISCLOSURE: Information contained on this website is based on public data, historical agreements and dialogue with intermediaries. Such information represents our current understanding of the described platforms and the costs associated with them. In many cases, such costs may be negotiable. All pricing and fee information is subject to change without notice.

Ultimus Fund Solution

8778 UFS 2/18/2022

Ultimus Fund Solution