FiNETIK – Asia and Latin America – Market News Network

Asia and Latin America News Network focusing on Financial Markets, Energy, Environment, Commodity and Risk, Trading and Data Management

UK asset managers lack confidence in reference data quality – survey

Over a third of UK-based asset managers and banks are not confident in the quality of reference data they use to support trading activity, according to a survey from IT services firm Patni.

The survey of 100 company representatives found that 91% of asset managers do not have a single supplier of reference data, with the remainder admitting that they were not sure of their source at all. Respondents say that an average of six per cent of trades fail as a result of poor reference data.

Yet just half of those questioned say they have not considered outsourcing the management of their reference data to a third party, due to fears of a potential loss of control and security breaches. Meanwhile, the overwhelming reason cited for considering outsourcing is the potential for cost savings, followed by higher levels of accuracy.

Philip Filleul, product manager, reference data, Patni, says: “Many buy-side and sell-side firms are now uncomfortably aware of both the time and costs they devote to purchasing, cleansing and distributing reference data, as well as the risks that arise when these tasks are not performed effectively, among them failed trades and lost revenue opportunities.”

“The twin pressures of achieving regulatory compliance and straight-through processing have highlighted substantial redundancy and duplication of effort in the area of reference data management.

“One in ten trades fail on first settlement attempt – and of these, 60 per cent -70 per cent can be attributed to poor data management. “

Research from the Tower Group, which was cited by the report, showed that nearly two thirds of failed trades did so due to inaccurate data.

Source: Finextra, Bobsguide, 29.10.2010

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Industry Briefing & Survey: Harnessing Data for Better Valuations – November 2009 A-TEAM

A new industry briefing and survey report from A-Team Group and GoldenSource

A-Team Group, a publishing and research company specialising in financial information technology, was commissioned by enterprise data management specialist GoldenSource to conduct research into the challenges of managing pricing and valuations data.

Throughout the course of October 2009, A-Team Group researchers interviewed senior-level specialists closely aligned to market data or valuations. Several spanned multiple responsibilities including oversight of client data, product information, and trading risk.

The interview sample was spread across asset managers (52%), Tier-1 and Tier-2 banks (32%), broker/dealers (11%) and custodians (5%).

Geographically, participants were dispersed across the United Kingdom (47%), Europe (21%), and the United States ((32%). Over half of the respondents had global responsibility within their organizations.

Source: A-TEAM, 19.11.2009

Filed under: Data Management, Data Vendor, Library, Market Data, News, Reference Data, Risk Management, , , , , , , , , , ,

SinoRock new star in China’s bank related assets/debts market

China’s NPL (Non-Performinb Loan) market is getting bigger, but the business model is changing to favore services-oriented local manager who have a large, local, sustainable and scalable operation throughout China.  Sino-Rock Investment Management Co Ltd based in HK brings a new dimension to NPL and Distressed Funds for Private Equity and Investors, with indepth knowhow, experience and understanding relations in China and the markets.  With the backing of its major shareholder Cinda (China’s largest AMC of NPLs), SinoRock is on the way to become the new star manager in China’s bank related assets/debts.

Foreign managers are losing NPL legal battles because their legal-battle oriented strategy is not working due to new policies and local cultures.  If NPL investment could be done by fighting legal battles, everyone could hire lawyers to fight legal battles to make profits.  That’s not the case  in China.

Source: SinoRock, October 2009

Additional News on China’s growing bank related assets/debts

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Global funds industry shifting to Asia

More than ever, fund management companies of all stripes need to build distribution into Asia and the Middle East, says Strategic Insight.

New York-based consultancy Strategic Insight says in a new report that the credit crunch has revealed the essential need for fund management companies to have a distribution into Asia – and predicts many more will build it.

Source: AsianInvestors, 27.10.2008 by Jaime DiBiaso

Funds under management in Asia as well as the Middle East and Latin America will grow much more quickly than those in the United States and Europe over the next five years, says Daniel Enskat, managing director and head of global consulting.

Fund companies that lack an Asian reach have suffered the most in the credit crunch, he suggests – not only because they missed out on last year’s asset-gathering bonanza, but because redemptions in Western countries, particularly Europe, have been most severe.

Such companies with only European clients, even if they have great performance, are nonetheless suffering acute redemption pressure, because investors are panicking and dumping anything to move to cash.

Strategic Insight says mutual funds in Asia have enjoyed net inflows of $60 billion from January to August, versus a net outflow of $360 billion in Europe.

Finally, for fund companies around the world, Asia is the most likely source of business to pull them out of the slump, due to its demographics, its economic growth prospects, the low penetration of investment products and the youth of the domestic fund industries.

Enskat cites China as an example. He compares China’s investors today to European ones in the run-up to the 2000 tech bubble collapse. In both cases, many first-time investors got burned. In Europe, investors generally switched to low-risk savings products and capital guarantees. So far, however, Chinese investors don’t seem to be in full retreat.

“Distributors don’t want to make the same mistake in China,” Enskat says. “They want to educate investors about having a longer-term framework.” He notes that regulators have taken a proactive stance against mis-selling and improving products, which is why the industry hasn’t suffered the kind of mass redemptions that have taken place this year in markets such as Germany and Italy.

Enskat reckons there is also a cultural factor. He says Asian societies, lacking a welfare state, have instilled a sense of self-reliance. First-generation entrepreneurs are relatively young and willing to take risks with their money, while Westerners, already wealthy, are more interested in capital preservation. “Asian investors are proactive, not defensive,” Enskat concludes.

He says the credit crunch, and blow-ups such as the Lehman Minibond fiasco in Hong Kong and Singapore, is an opportunity for the mutual-funds industry to argue its case: that funds are the most transparent, liquid and straightforward investment products that investors will find.

“Distributors want a simple story told with conviction for a transparent product,” he says.

The challenges are how to convey this message to investors (and to distributors’ sales teams). High management fees and front-end loads can be a problem during bear markets, although Enskat believes investors are willing to overlook these when times improve; eventually Asia will need to shift to an American model in which asset managers force their brokers to sell on the basis of advice, rather than commission for pushing products.

Today it seems nearly all the big global names in asset management are already on the ground in Asia. But Enskat observes that there are many small- and mid-sized fund managers in Europe and Asia that have yet to set up a presence in the region. Should this matter?

Consider, Enskat suggests, that two-thirds of today’s top 50 global houses would not have been ranked 10 years ago. Names like AllianceBernstein, BGI, Janus, Pimco, SSgA and T. Rowe Price would not have figured.

Now consider the coming regulation of the hedge fund industry. The biggest hedge funds will find themselves going public and competing for assets from sovereign wealth funds and other institutional investors, rather than rely on family offices and endowments. How many of these will be in the top 50 in another decade’s time? And how many of them have distribution networks in Asia now?

And the traditional funds world will also throw up new winners that are relatively unknown today, Enskat argues. He notes that fund companies can become major players on the back of a single product, citing Kokusai’s income bond fund (sub-advised now by Western Asset), Pimco’s total return bond fund, Pictet’s utilities fund, BlackRock’s global allocation fund and some of Schroders’ global balanced funds for UK pension clients.

There are plenty of mid-sized players in America and Europe with similar products, some of which will become the blockbusters of the future – but these companies have no exposure to the world’s new growth markets. Which means they will be looking to set up distribution arrangements. The pain of the credit crisis is going to accelerate this process.

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Asset Managers slam Brazil’s takeover rules

Small investors in Brazilian companies are left too vulnerable by the South American nation’s regulatory system, fund managers have complained.

The group of money managers and pension experts are now calling on the government for stricter takeover guidelines, Reuters reports.

Recently-announced proposals from pulp producer Votorantim Celulose e Papel (VCP) to take over smaller rival Aracruz Celulose have sparked the ire of firms including F&C Asset Management, TIAA-CREF and Legg-Mason.

One of the group’s key complaints is that such acquisitions make the Brazilian market less appealing for overseas investors who wish to buy minority stakes in companies.

Urban Larson at F&C Asset explained: “We are worried about the potential effect this could have in the Brazilian market as a whole since it does affect investors’ perception as to how minority shareholders will be treated.”

Commenting on the situation Luiz Leonardo Cantidiano, a lawyer for VCP, said: “Brazilian regulations are good because they are clear.

“If investors want more rights, they should look for a market that guarantees that.”

Source: Bobsguide, 29.08.2008

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