FiNETIK – Asia and Latin America – Market News Network

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Data Management – a Finance, Risk and Regulatory Perspective- White Paper

Download this  white paper – Data Management – a Finance, Risk and Regulatory Perspective – about the challenges facing financial institutions operating across borders with respect to ensuring data consistency and usability across multiple user types.

 The finance, risk and compliance operations of any financial institution need nimble access to business information, for performance measurement, risk management, and client and regulatory reporting. But although the underlying data may be the same, their individual requirements are different, reflecting the group-level view required by senior management and regulators, and the more operational view at the individual business level.

Where in the past, risk managers have been left to figure out what’s most appropriate for their particular institutions, regulators today are adopting a more aggressive stance, challenging the assumptions underpinning banks’ approaches to risk management. As a result, today’s challenge is not only to understand the current regulatory, risk or finance requirements, but also to set in place the analytical framework that will help anticipate future requirements as they come on stream. To find out more, download the white paper now

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Source: A-Team, 02.07.2013

Filed under: Corporate Action, Data Management, Library, Reference Data, Risk Management, Standards, , , , , ,

SIX Financial Information and LUZ Engenharia Financeira in strategic cooperation in Brazil

Zurich, Switzerland – SIX Financial Information and LUZ Engenharia Financeira, the largest provider of risk management software and consulting services to buy- and sell-side institutions in Brazil, have established a strategic relationship to meet the growing need for broader and deeper international financial market data in Brazil.

As Brazil’s investment community increasingly turns to foreign markets to achieve superior returns, reliable, high quality pricing and reference data becomes more important every day. SIX Financial Information, a leading provider of global financial information since 1930, will fill that need for clients of LUZ Engenharia Financeira.

Edivar Vilela Queiroz, CEO of LUZ Engenharia Financeira commented, “While the Brazilian financial services community has been well served by local data providers, SIX Financial Information has the breadth and depth of global market data to support current needs as well as the capacity to grow as our local market evolves.” He continued, “And as the world’s markets become ever more connected and transparent, this is an important differentiator that will allow seamless growth into offshore markets.”

“As Brazil becomes a major force in the global financial markets, foreign investors will undoubtedly continue their steadily increasing interest in the Brazilian markets and help foster even more growth,” said Barry Raskin, Managing Director for SIX Financial Information USA. “We are excited to extend our focus to this vibrant market, and very pleased that LUZ-EF has given us their stamp of approval through this strategic partnership.”

On Wednesday, March 13 2013, SIX Financial Information and LUZ-EF will jointly host a client event in São Paulo where they will formally announce their partnership and describe the international equity and options pricing and reference data available through the LUZ-EF platform.

Source: SIX Financial Information, 12.03.2012

Filed under: Brazil, Data Management, Data Vendor, Reference Data, , , , , , , ,

Top 10 Root Causes of Data Quality : The Basics – Part 1

We all know data quality problems when we see them.  They can undermine your organization’s ability to work efficiently, comply with government regulations and make revenue. The specific technical problems include missing data, misfielded attributes, duplicate records and broken data models to name just a few.

But rather than merely patching up bad data, most experts agree that the best strategy for fighting data quality issues is to understand the root causes and put new processes in place to prevent them.  This five part blog series discusses the top ten root causes of data quality problems and suggests steps the business can implement to prevent them.

In this first blog post, we’ll confront some of the more obvious root causes of data quality problems.

Root Cause Number  (1) One : Typographical Errors and Non-Conforming Data
Despite a lot of automation in our data architecture these days, data is still typed into Web forms and other user interfaces by people. A common source of data inaccuracy is that the person manually entering the data just makes a mistake. People mistype. They choose the wrong entry from a list. They enter the right data value into the wrong box.

Given complete freedom on a data field, those who enter data have to go from memory.  Is the vendor named Grainger, WW Granger, or W. W. Grainger? Ideally, there should be a corporate-wide set of reference data so that forms help users find the right vendor, customer name, city, part number, and so on.

Root Cause Attack Plan

  • Training – Make sure that those people who enter data know the impact they have on downstream applications.
  • Metadata Definitions – By locking down exactly what people can enter into a field using a definitive list, many problems can be alleviated. This metadata (for vendor names, part numbers, and so on can) become part of data quality in data integration, business applications and other solutions.
  • Monitoring – Make public the results of poorly entered data and praise those who enter data correctly. You can keep track of this with data monitoring software such as the Talend Data Quality Portal.
  • Real-time Validation – In addition to forms, validation data quality tools can be implemented to validate addresses, e-mail addresses and other important information as it is entered. Ensure that your data quality solution provides the ability to deploy data quality in application server environments, in the cloud or in an enterprise service bus (ESB).

Root Cause Number (2) Two : Information Obfuscation
Data entry errors might not be completely by mistake. How often do people give incomplete or incorrect information to safeguard their privacy?  If there is nothing at stake for those who enter data, there will be a tendency to fudge.

Even if the people entering data want to do the right thing, sometimes they cannot. If a field is not available, an alternate field is often used. This can lead to such data quality issues as having Tax ID numbers in the name field or contact information in the comments field.

Root Cause Attack Plan

  • Reward – Offer an incentive for those who enter personal data correctly. This should be focused on those who enter data from the outside, like those using Web forms. Employees should not need a reward to do their job. The type of reward will depend upon how important it is to have the correct information.
  • Accessibility – As a technologist in charge of data stewardship, be open and accessible about criticism from users. Give them a voice when processes change requiring technology change.  If you’re not accessible, users will look for quiet ways around your forms validation.
  • Real-time Validation – In addition to forms, validation data quality tools can be implemented to validate addresses, e-mail addresses and other important information as it is entered.

This post is an excerpt from a white paper available here. More to come on this subject in the days ahead.

Source: 24.08.2011 Steve Sarsfield – The Data Governance and Data Quality Insider

Filed under: Data Management, Library, Standards, , , , , , ,

Integration of Histroical Reference Data

Historical data is becoming more crucial to managing risk, but to make it useful, data updates must be reconciled with the moments actual changes in data occurred, says Xenomorph’s Brian Sentance.

There has been much talk recently about integrated data management, as the post-crisis focus on risk management demands a more integrated approach to how the data needed by the business can be managed and accessed within one consistent data framework. Much of the debate has been around how different asset classes are integrated within one system, or how different types of data—such as market and reference data—should be managed together.

However, there has been little discussion on how historical components can be integrated into the data management infrastructure. This will have to change if the needs of regulators, clients, auditors and the business are to be met in the future.

Why is history and historical data becoming more important to data management? There are many reasons. First, data management for risk needs historical data in a way that simply was not necessary for the reference data origins of the industry over a decade ago.

Another reason would be the increasing recognition that market data and reference data need to be more integrated, and that having one without the other limits the extent of the data validation that can be performed. For example, how can terms and conditions data for a bond be fully validated if the security is not valued by a model and prices not compared to the market?

As another example, how many data management staff were overloaded by the “false positives” of price movement exceptions during the highly volatile markets of the financial crisis? I would suggest many organizations would have saved hours of manual effort if the price validation thresholds used could have automatically adjusted to follow levels of market volatility derived from historical price data.

Regulators and other organizations in the financial markets now want to know more of the detail behind the headline risk and valuation reports. The post-crisis need for an increase in the granularity of data should be taken as a given. This is progressing to an extent where external and internal oversight bodies not only want to know what your data is now, but want the ability to see what the data was at the time of market or institutional stress. Put another way, can you easily reproduce all the data used to generate a given report at a specific point in time? Can you also describe how and why this data differs from the data you have today?

“But I already have an audit trail on all my data,” I hear you say. Yes, that is a necessary condition on being able to “rewind the tape” to where you were at a given time, but is that sufficient? An audit trail could be considered as a sparse form of historical “time series” storage for data, but as we all are aware, there are not many pieces of “static” data that do not change over time (corporate events being the main cause behind these kinds of changes). The main issue with audit trail use here is that it can only represent the times when the data value was updated in the database, which is not necessarily the same time as when the data value was valid in the real world.

So for example, for the sovereign, that forces a change in the maturity dates of its issued bonds. You can only capture when your data management team implemented the change in the database, not necessarily when the change was actually made in the market. Hopefully, the two times may turn out to be the same if your data management team is efficient and your data suppliers are accurate and timely. But don’t count on it, and don’t be too surprised if a regulator, client or auditor is displeased with your explanation of what the data represents and why it was changed when it was. We are heading into times where not knowing the data detail beneath the headline numbers is no longer acceptable, and historic storage of any kind of data—not just market data—will necessarily become much more prevalent.

Source: Xenomorph, 13.07.2011

Filed under: Corporate Action, Data Management, Data Vendor, Market Data, Reference Data, Risk Management, Standards, , , , , , , , ,

Buy-Side Platforms: Nirvana in the Front-Office

Centralized, cross-asset trading on a single platform may avoid compliance and risk nightmares. (Round-up industry story on OTC derivatives quotes CRD Managing Director-Global Tom Driscoll and Product Manager Karl Kutschke. The complete story follows.)

 As regulators close the gap between the over-the-counter and exchange-traded markets, order management system and specialist OTC suppliers are gearing up provide the buy side with a single, centralized platform for OTC and listed instruments – a possible Nirvana for the front-office.

 Ultimately, the new rules of the road for the nearly $600 trillion OTC market will give the buy side a long “to-do” list.

 The vendors may have some breathing space. In the US, the regulatory changes are in a state of flux and are likely to miss their mandated deadlines. The Securities and Exchange Commission and the Commodity Futures Trading Commission are moving to set up swap execution facilities, which are exchange alternatives for OTC instruments; OTC clearing platforms with collateral requirements; and swap data repositories.

The regulators are also likely to issue rules that will lead to changes in back office operations, intended to capture and calculate risk to comply with new, forthcoming margining rules. The driving force behind these changes, the Dodd-Frank Act, also allows OTC trades to be transacted on futures exchanges. European regulators are expected to enact similar reforms later this year, which is when the new rules from US regulators are likely to take effect.

The new regulatory environment will mean new connectivity to SEFs, extra transparency into the risk profile of their counterparties, and more transparency into OTC instruments via additional analytics and risk controls. They will need a broader view of the exposure that OTC instruments pose to portfolios. Some of these steps, however, run counter to the push for platform consolidation.

 Step 1: consolidation

Many mid-to-large sized shops are using as many as seven different trading systems to cover cash, foreign exchange, proprietary trading, equities, and fixed income, says Gavin Little-Gill, global head of asset management product strategy for Linedata Services, maker of the Longview OMS. In many cases, the OTC desk is not yet automated.

 “How do you run compliance that way? How do you understand what your counterparty risk is? How do you truly measure your exposure?” Little-Gill asks. “In that environment, it’s very difficult to do so.”

 One way around this problem is for front-office platforms to do a much better job of capturing the “cleanest possible portfolio data as soon as possible,” Little-Gill says. Users also want the data to be validated to avoid data scrubbing later, he says.

 Multiple, isolated systems can arise from firms that have taken a do-it-yourself or a best-of-breed approach, says Robin Strong, director of buy-side market strategy for Fidessa, which offers the LatentZero Minerva OMS/execution management system. These siloed systems have frequently been long and costly implementations. Firms often wind up with a harsh realization that “they can’t actually do pre-trade compliance because half of the trades are in one system and half are in another,” Strong says.

 Moving to centralized, cross-asset trading on a single platform could help avoid compliance and risk nightmares.  “I’d say the nightmare is trying to get a consolidated risk picture,” says David Kelly, director, credit products at Quantifi, a provider of analytics, trading and risk management software for the OTC markets. The strengths of OMS platforms are in equity and bond transactions, not OTC, he says. “Throw a CDS at them and forget it,” Kelly says. “What risk system do you overlay on top of these execution/order management systems that allow you to consolidate a picture of your risk?”

 To avoid nightmares, user firms have to first organizationally change the siloed mentality, says Sang Lee, co-founder and managing partner at Boston-based market research firm Aite Group. “The best approach to providing cross-asset compliance via OMSs would be to make sure that all transactions across the different asset classes get funneled through the OMS so that the compliance module can keep track from a centralized position,” Lee says.

 Converging assets and technologies

In addition, OMS platforms will need more inroads into the OTC environment, says industry analyst Stephen Bruel, an analyst at market research firm TowerGroup. As the OTC market starts to resemble the futures space, “the OMSs will have to make some changes to be able to handle the nuances of the OTC book”, he says.

 “At the same time, there are some OTC derivatives providers such as Misys, Calypso and Murex that perform a lot of these front-office trading functions from an OTC perspective and they’re going to need to modify their technology so that they look and act like something that trades futures because that’s how the trading is going to evolve,” says Bruel, adding that the OTC providers lack the real-time data management capabilities that “you see more on the listed side”.

OMS vendors also have to recognize that there will be no “one-size-fits-all” problem set that they can use to model their cross-asset platforms, says Rob Agne, director of product management at ConvergEx’s Eze Castle Software. The North American, European and Asia-Pacific markets will be distinct as will the asset classes. “Different asset classes will be traded on different SEFs,” he says. Counterparties may choose to specialize. Amid the maze of new rules and regulations, customers will need help finding increased levels of liquidity and transparency, not to mention support for new file formats and reporting requirements.

“You can see how this just perpetuates into somewhat of a difficult environment,” Agne says. “We’re not rushing out to connect to everyone. Part of what we’re trying to do is listen to what our clients are asking for.” Agne says he’s hoping for more standardized, extensible APIs that can serve as a kind of insurance against a likely shakeout among the SEFs and related venues. He is also hoping for standardized contracts via the SEFs.

 However, Agne cites one key benefit of moving OTC transactions to trading venues – the generation of market data. “As a technology vendor, we’ll need to have adapters to bring in that real-time market data for our clients to take advantage of. As these are traded on exchanges, there will be more data for us to process and that’s something we need to consider. We’re working on it.”

Before vendors launch the single platform for all, they will have to resolve “off the charts” customer demands for compliance and regulatory support, says Chuck Giessen, senior vice president and general manager for the financial markets group of SS&C Technologies, maker of the Antares OMS. “The issue in our industry now is the increasing requirements for transactions,” Giessen says.

A case in point is the 11 million Finra-mandated Order Audit Trail System reports processed per month by the SS&C Antares platform, Giessen says. In addition, Antares supports reporting procedures for exchange-traded equities governed by Mifid in Europe and by regulators in Australia.

“As reporting requirements start to include other asset classes, there is a general issue in the transaction sequencing numbers and how you report them and how things are centralized,” Giessen says. Firms will have to grapple with the issue of principal trading books and how to tie them to their underlying options via time sequencing.

 “It’s a massive issue for our clients so we’re doing significant work for them,” Giessen says. “All of which argues for increased spending for IT in an environment where people have less money to spend. And that’s the squeeze. I think that’s the dilemma – everybody knows they need more, but they just aren’t sure how to pay for more.”

 Going to market

When they do go to market, the buy side will find the vendor space a lot “more crowded over the next 12 months,” Bruel says. “We may even see some partnership activity.” For the moment, some vendors are skipping the partnership step. Calypso Technology, for instance, is readying an OTC OMS (See “Calypso to build ‘OTC OMS'”, page 32) while Charles River Development has its own analytics.

 In fact, Charles River will not be partnering with a specialist OTC provider, says Tom Driscoll, the global managing director at the firm, maker of the IMS platform. “We’ve poured tens of millions, if not more, into the support of these types of instruments,” he says.    “We’re building out our capabilities on analytics and there’s risk management as well,” says Karl Kutschke, product manager, fixed income and derivatives at Charles River. Users will be able to watch a trade’s progression through its lifecycle, including its impact on portfolios.

Providing analytics, risk and compliance support will be differentiators among OMS vendors because the pain points have shifted to pre-trade elements, Driscoll says. “A couple of years ago, pre-trade compliance and risk may have been as ‘nice-to-haves,’ “he says. It’s really more of a must-have now.”   Driscoll acknowledges that specialty systems can excel at certain tasks. However, they may miss broader elements such as non-derivative asset classes. “Many of them are good on the risk side but with compliance rules that’s been a challenge,” says Driscoll, who adds that working with a third party contradicts the push for platform consolidation.

Dan Matthies, global head for the Asset and Investment Manager OMS from Bloomberg, says he agrees that pre-trade compliance has become more important for OTC derivatives processing, which is why AIM offers calculations. “If you’re creating a credit default swap on Bloomberg, you’re setting up the deal terms whether they’re captured electronically or created manually,” Matthies says. The deal terms are entered into a calculator before the transaction is sent to AIM.

 Quantifi might consider partnerships with OMS vendors, despite the fact that their product scope is “very limited to cash equities and bonds,” Kelly says. “There’s not a whole lot of analytics in the equities space unless you’re doing charting, which we don’t do.” Quantifi may have more interactions with the OMS providers once they start sending OTC instruments to SEFs.

As for the single platform for all, Kelly says it is nonexistent. “I would argue that if there were such a system it would have a monopoly position in the vendor space,” he says. “In my 20 years in the business, I’ve not seen it created – mostly because the spectrum is so broad.”   Other vendors express a more qualified support for a centralized platform.

 Mattheis says that, while AIM comes very close to being the complete platform, “there’s always going to be something that any system or platform doesn’t do as a result of the market continuing to reinvent itself.” The key is to work with “the biggest community” of diverse firms trading across different asset classes and regions who can then serve as development partners, he says.

“It depends on the requirements of the firm,” Driscoll says. “If you do it across multiple asset classes, finding a system that’s perfect in every asset class is probably not realistic.” However, Driscoll argues that a module that supports 90% of an instrument’s operation and is connected to a unified platform is superior to an isolated system that does 99 percent of the job but costs millions of dollars to integrate. The end users will ultimately decide if they are willing to make that kind of a trade-off for Nirvana.

Source; April 8, 2011; Banking Technology

Filed under: News, Risk Management, Trading Technology, , , , , , ,

Principal Financial Mexico Completes Roll-out of Charles River IMS

Multi-phased project automates pension and mutual fund operations; supports all asset classes .

Boston – February 22, 2011 – Charles River Development (Charles River), a front- and middle-office investment software solutions provider, today announced that Principal Financial Group Mexico, one of Mexico’s largest banking groups, has completed a multi-phased rollout of the Charles River Investment Management System (Charles River IMS) across its Principal AFORE (pensions) and Principal Fondos de Inversion (mutual fund and asset management) divisions in Monterrey and Mexico City. Principal was the first Charles River client in Mexico to implement Charles River IMS. The project is part of Principal’s initiative to ensure business growth by automating manual processes and offering more sophisticated investment strategies for investors and retirees.

Phase One of the project, completed in 2008, automated Principal’s compliance monitoring of domestic equity and fixed income instruments. This final phase provides Principal AFORE and Principal Fondos de Inversion users with automated portfolio management, trading and compliance monitoring for local and international asset classes on a single-consolidated platform. Charles River’s implementation experts also built seamless interfaces with Principal’s proprietary mutual fund accounting system and third-party pension accounting system, Soluciones. In the near future, Principal plans to support more derivative instruments, including credit and interest rate swaps.

During the rollout, Principal was instrumental in advising Charles River on Mexico’s unique requirements and workflows. Charles River IMS supports Mexican fixed income instruments, including corporate and government Bonos, CETES and UDIBONOS. Users can also manage collateral for Mexican repo transactions, including interest rate calculations.

“To stay ahead of Mexico’s evolving regulations for mutual fund and pension portfolios, we required an integrated platform that could streamline workflows and support complex investment instruments,” said Alejandro Echegorri, chief financial officer, Principal Financial Group. “With Charles River IMS, we have a truly global system that enhances our competitiveness in the region. Our traders, portfolio managers and compliance officers can now trade and monitor all asset classes, including specialized debt for local, global and emerging markets. Further, we have eliminated our dependence on spreadsheets and reduced our risk throughout the trade process.”

“Charles River provides asset managers in Mexico and worldwide with the technical infrastructure to support new asset classes and increased trade volumes for future growth,” said Spiros Giannaros, vice president-sales, Americas, Charles River Development. “The system makes it easy to analyze portfolios and implement changes in real-time. Users also have an end-to-end audit trail to validate compliance throughout the trade lifecycle.”

Charles River IMS’ advanced functionality helps Principal comply with Mexican regulations. For example, Principal AFORES can meet CONSAR (Comision Nacional del Sistema de Ahoro para el Retiro) pre-trade reporting requirements for derivatives. Principal Fondos de Inversion can adhere to CNBV (Comision Nacional Bancaria y de Valores) asset allocation rules limiting mutual fund exposure to issuers. Charles River IMS has pre-built compliance libraries containing over 1,700 regulatory and general example rules across 35 regulatory bodies of 20 countries.

Charles River supports five buy-side client firms in Mexico, and serves over a dozen firms across Brazil, Chile, and Panama.

About Principal Mexico

The Principal operates in Mexico through five separate entities: Principal AFORE (pensions), Principal Pensiones (annuities), Principal Fondos de Inversión (mutual funds and asset management), and Principal Seguros (life insurance and accumulation) and Principal Asset Management, our division focusing on large companies, Governments and Institutions.

Headquartered in Monterrey, Mexico, Principal AFORE is a private pension company that manages and administers individual employee retirement plans through the state mandatory retirement system Administradoras de Fondos de Retiro (AFORE). Since our inception in 1997, Principal AFORE has earned a top-five market position in the pre-retirement accumulation market.

Also headquartered in Monterrey, Principal Fondos de Inversión has generated impressive growth in the retail mutual funds segment and has shown market leadership in the creation of specialty products catering to high net worth clients. In addition, the company has begun important distribution agreements that will permit us to develop brand recognition and increase our assets under management.

Source: CRD, 22.02.2011

Filed under: Latin America, Mexico, News, , , , , , , , , , ,

Charles River Development Wins Buy-Side Technology’s “Best Buy-Side OMS” Award for 4th Consecutive Year

Single, consolidated platform streamlines workflows and lowers costs and risks for buy-side firms

Charles River Development (Charles River), a front- and middle-office investment software solutions provider, today announced that the Charles River Investment Management System (Charles River IMS) has won the Buy-Side Technology Award for “Best Buy-Side Order Management System” for the fourth consecutive year.

“Once again, this award validates Charles River’s commitment to empower portfolio managers, traders and compliance officers with advanced tools that improve efficiencies and reduce risk and costs,” said Peter Lambertus, President and Chief Executive Officer, Charles River Development. “Our continued investment in research and development delivers flexible, scalable solutions to support requirements of both large and small firms.”

Judges for the Buy-Side Technology Awards 2010 included leading buy-side-focused technology consultancy firms. These experts selected Charles River IMS as a multi-asset, multi-currency solution for automated decision support and portfolio management, real-time pre- and post-trade compliance and global FIX trading.

The Buy-Side Technology award follows Charles River’s recent recognition for “Best Buy-Side Technology Firm” by Asia Asset Management Best of the Best Awards and the “FinTech Top 100,” American Banker/Financial Insights 2010.

Source: Charles River Development, 08.11.2010

Filed under: Asia, Brazil, FIX Connectivity, Latin America, Mexico, Risk Management, Trading Technology, , , , , , , , , , , , , , ,

Scotiabank Inverlat S. A. de México automatiza los procesos de fondos mutuos con el sistema de gestión de inversiones Charles River

Simplifica el flujo de trabajo; asegura el cumplimiento de todos los títulos e instrumentos de deuda locales e internacionales

21 de octubre de 2010 – Charles River Development (Charles River), un proveedor de soluciones de software de inversión para las áreas de gestión, operación, cumplimiento, riesgos, cálculos de medidas de desempeño, atribuciones, análisis de riesgos, y tecnología de la información (front-and middle-office), anunció hoy que Scotiabank Inverlat, S.A. (Scotiabank México), uno de los grupos bancarios más grandes de México, ha implementado el sistema de gestión de inversiones (Charles River IMS) a través de su subsidiaria Scotia Fondos. El proyecto de fases múltiples, entregado puntualmente, es parte de la iniciativa de Scotia Fondos para automatizar sus procesos de Fondos de Inversión locales e internacionales con 16 opciones de cartera diferentes en una única plataforma consolidada.

Los usuarios de Scotia Fondos se benefician de herramientas avanzadas de toma de decisiones y análisis, gestión de cartera y transacciones automatizadas, y supervisión del cumplimiento previo a la transacción en tiempo real de todas las clases de activos, incluso capitales, mercados monetarios, fondos mutuos, así como también instrumentos de renta fija corporativos y gubernamentales mexicanos, tales como Bonos, CETES y UDIBONOS. Durante el proyecto inicial, Charles River automatizó los procesos de gestión y transacciones de cartera de capitales de Scotia Fondos, así como la supervisión del cumplimiento. La segunda fase consolidó las capacidades a lo largo de los procesos de renta fija de la empresa.

“Necesitábamos un sistema ultramoderno y un proveedor con experiencia comprobada en apoyar las necesidades de los gestores de activos de México; Charles River entregó ambos”, dijo Ernesto Diez, Director General, Scotia Fondos. “Nuestros gestores de carteras ahora pueden estar a la cabeza del mercado al analizar e implementar rápidamente los cambios en las carteras. También podemos validar que nuestras carteras cumplan con todas las obligaciones, en cualquier momento y para cualquier clase de activo”.

El respaldo a los numerosos requisitos del mercado local de México fue crucial para este proyecto. Charles River IMS permite a Scotia Fondos gestionar y ejecutar transacciones para todos los instrumentos de deuda gubernamentales y corporativos mexicanos. Los operarios de fondos mutuos de la empresa también pueden ejecutar préstamos de valores, dar apoyo a contratos de recompra y reequilibrio contra los índices mexicanos. Además, la arquitectura abierta de Charles River facilita a Scotia Fondos integrarse con su sistema de contabilidad propietario, así como con proveedores de servicios de apoyo administrativo (back-office), tales como Bloomberg para cotización en tiempo real, y Valmer, propiedad de la Bolsa de Valores mexicana, para información de riesgo.

Charles River IMS da apoyo a tipos de títulos específicos para la región y flujos de trabajo asociados, incluso certificados de inversión corporativos y gubernamentales mexicanos. En un futuro cercano, Scotia Fondos continuará con la implementación de la funcionalidad de cobertura y cálculos de exposición de derivados avanzados de Charles Rivera IMS, para ayudar a sus clientes a cumplir con la reglamentación mexicana, como las reglas de la Comisión Nacional Bancaria y de Valores (CNBV), al hacer una supervisión y gestionar la exposición previa y posterior a la transacción de instrumentos derivados. Las bibliotecas prefabricadas de cumplimiento de Charles River contienen más de 1.700 reglas de ejemplo generales y normativas a lo largo de 35 organismos reguladores de 20 países, incluso una biblioteca completa de reglas para México.

“Charles River proporciona a los gestores de activos en México soluciones sofisticadas pero fáciles de usar para expandir sus operaciones a nuevas clases de activos y mercados, para entregar una ventaja competitiva que respalda el crecimiento comercial”, dijo Spiros Giannaros, Vicepresidente de Ventas, Americas, Charles River Development.

Charles River brinda apoyo a cinco empresas clientes en México, y presta servicios a más de una docena de empresas a lo largo de Brasil, Chile, y Panamá.

Fuente: CRD 21.10.2010

Filed under: Data Management, Latin America, Mexico, Risk Management, , , , , , , , , , , , , , , , ,

Mexico’s Scotiabank Inverlat, Automates Mutual Fund Operations with the Charles River Investment Management System

Streamlines workflows; ensures compliance for all local/international securities and debt instruments

October 21, 2010 – Charles River Development (Charles River), a front- and middle-office investment software solutions provider, today announced that Scotiabank Inverlat, S.A. (Scotiabank Mexico), one of Mexico’s largest banking groups, has implemented the Charles River Investment Management System (Charles River IMS) across its Scotia Fondos subsidiary. The multi-phased project, delivered on-time, is part of Scotia Fondos’ initiative to automate its domestic and international mutual fund (Fondos de Inversion) operation with 16 different portfolio options on a single, consolidated platform.

Scotia Fondos’ users benefit from advanced decision-making and analysis tools, automated portfolio management and trading, and real-time, pre-trade compliance monitoring for all asset classes, including equities, money market, mutual funds, as well as Mexican corporate and government fixed income instruments, such as Bonos, CETES and UDIBONOS. During the initial project, Charles River automated Scotia Fondos’ equity portfolio management and trading operations, as well as compliance monitoring. The second phase consolidated capabilities across the firm’s fixed income operations.

“We required a state-of-the-art system and a vendor with proven experience in supporting the needs of Mexico’s asset managers; Charles River delivered both,” said Ernesto Diez, Director General, Scotia Fondos. “Our portfolio managers can now stay ahead of the market by analyzing and rapidly implementing changes to portfolios. We can also validate that our portfolios comply with all mandates – at any time and for any asset class.”

Support for Mexico’s numerous local market requirements was critical to the project. Charles River IMS allows Scotia Fondos to manage and execute trades for all Mexican government and corporate debt instruments. The firm’s mutual fund traders can also execute stock lending, support repurchase agreements and rebalance against Mexican indices. In addition, Charles River’s open architecture makes it easy for Scotia Fondos to integrate with its proprietary accounting system, as well as back-office providers, such as Bloomberg for real-time pricing, and Mexican Stock Exchange-owned Valmer for risk data.

Charles River IMS supports region-specific security types and associated workflows, including Mexican corporate and government bonds. In the near future, Scotia Fondos will continue with the implementation of Charles River IMS’ advanced derivatives exposure calculations and coverage functionality helping clients comply with Mexican regulations, such as Comision Nacional Bancaria y de Valores (CNBV) rules, by monitoring and managing pre- and post-trade exposure to derivatives instruments. Charles River’s pre-built compliance libraries contain over 1,700 regulatory and general example rules across 35 regulatory bodies of 20 countries, including comprehensive rule libraries for Mexico.

“Charles River offers asset managers in Mexico sophisticated, yet easy-to-use solutions for expanding their operations into new asset classes and markets – delivering a competitive advantage that supports business growth,” said Spiros Giannaros, Vice President of Sales, Americas, Charles River Development.

Charles River supports five client firms in Mexico, and serves over a dozen firms across Brazil, Chile, and Panama.

Source: CRD, 21.10.2010

Filed under: Brazil, Chile, FIX Connectivity, Latin America, Mexico, News, Risk Management, , , , , , , , , , , , ,

Panama: Banco General live on Charles River IMS

Charles River Development (Charles River), a front- and middle-office investment software solutions provider, today announced that Banco General, S.A., the largest private banking institution in Panama, is live on Version 9.1 of the Charles River Investment Management System (Charles River IMS).

The project, delivered on-time and on-budget, is part of Banco General’s initiative to automate the firm’s wealth management operations. Key project goals included: integrating workflows of Banco General’s Private Banking unit and BG Valores brokerage subsidiary on a single platform; providing access to remote brokers; and enabling real-time electronic trading via FIX (Financial Information eXchange).

Over 50 Banco General users benefit from Charles River IMS’ automated portfolio management, trading, and compliance monitoring, as well as seamless integration with accounting and other back-office providers. Users include 39 remote BG Valores brokers who leverage the Charles River Anywhere browser-based workstation to remotely monitor and manage portfolios, compliance, trades and post-trade information in real-time for wealth management clients. The Charles River FIX Network enables Banco General to route orders electronically to its primary offshore broker.

“Charles River IMS has increased our efficiency and reduced operational risk, creating a unified platform and delivering remote capabilities to service both our Private Bank and BG Valores clients,” said Carlos E. Samaniego, Assistant Vice President, BG Valores. “We now have fully-integrated order capture and trading workflows, and FIX trading capabilities. We can also validate compliance anytime – across all asset classes and domestic and international orders – whether trading Panamanian Bolsa de Valores securities, fixed income instruments, hedge funds or mutual funds.”

Supporting BG Valores’ remote brokers was a key project goal. With Charles River Anywhere, brokers can quickly originate client-directed orders and access account information in real-time. “Charles River understands the wealth management business,” said Samaniego. “They have delivered the best technological solution, training and support to meet our operational needs, as well as tools to help build client relationships.”

Banco General also streamlined its processes for trading equity and options orders with real-time global electronic FIX trading through the Charles River Network. The firm connects to its brokers via Charles River’s low-cost, internet-based Virtual Private Network option. Charles River’s FIX Network Services provides Banco General with complete FIX software administration, connectivity management and support for each sell-side broker and trading destination. The Charles River Network is fully integrated with Charles River IMS and includes over 120 buy-side firms, 440 broker-dealers, and has 3,700 live broker/client FIX connections.

“Charles River helps wealth managers, like Banco General and BG Valores, support high volumes of high-net worth, SMA, UMA, UMH and discretionarily-managed portfolios,” said Spiros Giannaros, Vice President-Sales, Americas, Charles River Development. “Many of our wealth management clients have rolled out Charles River Anywhere to their Financial Advisors because it increases their efficiency by making account information available 24×7 – anywhere.”

Source: Finextra, 21.07.2010

Filed under: Banking, Data Management, Latin America, News, Services, Wealth Management, , , , , , , , , ,

CSRC outlines how funds can invest in CSI 300 futures

The regulator releases an early draft of the proposed rules for Chinese mutual funds that want to invest in CSI 300 index futures.

s fund analysts and managers continue to attend futures training courses organised by the China Securities Regulatory Commission, a draft of the CSRC’s proposed rules on how Chinese mutual funds can invest in the upcoming CSI 300 index futures hit the industry’s email inboxes earlier this week.

The regulator is encouraging discussion in the industry; it wants the public to provide feedback on the rules by this coming Monday, March 22.

A first glance through the five-page draft seen by AsianInvestor suggests the rules look straightforward, and its broad strokes read largely the same — both in language and spirit — to the rules for futures investing by fund managers in Taiwan. (This doesn’t come as a surprise; the regulations governing mutual-fund investments in securities, which went into effect in China in 2004, were also modelled after those in Taiwan.)

In the draft, the CSRC does not go into detail on how managers will qualify for futures-investing status. Fund houses, instead, are advised to review their fund prospectuses and contracts agreed with investors back at the fundraising stage and decide for themselves whether futures investing would meet their initial investment objective and risk exposure level as promised to investors.

For the fund industry, use of futures for the purpose of return enhancement is not permitted. The CSRC says the purpose of any fund activities in the futures market should be risk management.

The futures instruments for fund investment must be approved by and listed on China’s securities exchanges, and based on indices tracking only equity prices. (So notions of funds participating in bond futures or pretty much any other type of derivative would be futile at this stage.)

There are 559 mutual funds known to exist in China, according to the latest fund-registrar data tracking numbers published at the end of January. A quick search using the word ‘futures’ in Chinese in a fund database yields only 29 hits, in which ‘futures’ are specifically mentioned in the fund contracts or prospectuses as acceptable instruments for use by these funds.

Should these managers be willing to take up the challenge, they will theoretically be the initial 29 participants able to actually short A-shares domestically in China. (And there are 11 onshore brokerages authorised to serve them.)

Equity funds, balanced funds and principal-protected funds appear largely free to allocate to the CSRC’s approved list of futures instruments. The regulator thus far has made no mention on what it intends to do about segregated accounts and multi-client segregated-accounts, which went live in 2008 and 2009 respectively.

There will be limits on the holdings of futures by close-ended funds, open-ended index funds and exchange-traded funds. At the end of any given trading day, total value of securities held plus futures may not exceed 100% of a fund’s NAV — in short, leverage will not be permitted for these funds.

For open-ended funds, managers will be allowed to hold futures with a total outstanding value that exceeds 10% of the fund’s daily AUM at market closing. Net turnover of equity futures trading in a fund cannot exceed 20% of a fund’s NAV.

At the end of any given trading day, the total value of futures positions plus the value of the securities held in an open-ended fund may not exceed 95% of the fund’s NAV — with ‘securities’ defined as equities, bonds, options, asset-backed securities and repo instruments. Five percent of the fund’s assets must be allocated to liquidity instruments with maturities no longer than the equivalent of one-year government bonds.

Mindful that the funds industry at large is still poring over lecture notes and textbooks this month and that most firms have not yet hired the required techies for back-end support, the CSRC is advising caution and proper understanding; all participants should be adequately prepared before they enter the futures market. The CSRC wants fund houses to set up specific departments covering futures strategies and investments.

Other stakeholders, including guarantors to the ‘principal-protected’ funds (China’s version of CPPIs), are advised to get actively involved and aware of the potential value-at-risk for the funds they have given guarantee to; and that there should be sufficient assets to cover the principal-protected funds promised to investors should any potential losses occur.

Custodian banks are advised to review their own adequacy and strategies accordingly and develop risk-management and technological teams and platforms to support this development.

In earlier interviews with AsianInvestor, fund-rating agencies, including Morningstar and Lipper, have already taken a dim view of the opening moves that mutual fund houses will be able to make. Aside from the anticipated volatility to come, both predict a conservative and difficult early period, in which fund houses will be constrained by a lack of experienced staff and technical knowledge to draw on — for what is supposedly one of the most important chapters in the recent history of capital-market developments in China.

Nonetheless, for now, unregulated private funds, foreign investors with access to A-share markets and high-net-worth clients, and the 11 brokerages authorised to trade futures, are expected to be the largest beneficiaries.

For foreign players, though, CSI 300 futures will just be something to add to the toolbox. Overseas funds have long been able to express their views on A-shares using FTSE Xinhua A50 futures available in Hong Kong or Singapore., 18.03.2010 by By Liz Mak

Filed under: China, Exchanges, News, , , , , , , , , , , , , , ,

BMV- Mexican Stock Exchange changes Crossing Rules

The Mexican Stock Exchange authorities announced on November 19th that starting on November 30, new rules for crossing stock on the BMV will be implemented.

As of November 30, crosses of 50% of the average daily traded volume of the last six months in a particular stock, will be able to be crossed “clean” (without interference from other brokers) as long as the cross is executed at a price between the bid and the offer.

Source: IXE, 20.11.2009

Filed under: BMV - Mexico, Exchanges, Latin America, Mexico, News, Risk Management, , , , , , , , ,

SEC sets sights on sponsored access and exchange co-location

After taking on dark pools and flash orders, the Securities and Exchange Commission has now turned its attention to high frequency trading and the practice of sponsored access to exchanges.

In a speech at the Sifma annual conference, SEC chairman Mary Schapiro told delegates that the regulator is drafting a proposal on sponsored access, focussing on arrangements that enable unfiltered access by non-regulated entities – in many cases, high frequency traders – to exchange systems.

“I liken it to giving your car keys to a friend who doesn’t have a license and letting him drive unaccompanied,” says Schapiro.

She argues that broker-dealers act as gatekeepers, maintaining the integrity of markets and that this should not be sacrificed “to give a trader a millisecond advantage”.

Schapiro has also asked SEC staff to find ways to shed light on high frequency traders, who now account for more than 50% of volume.

“I believe we need a deeper understanding of the strategies and activities of high frequency traders and the potential impact on our markets and investors of so many transactions occurring so quickly. And we need to consider whether there are additional legislative authorities needed to address new types of market professionals whose activities may not be sufficiently regulated,” she says.

In addition, the watchdog expects to seek public comment on co-location – the process where exchanges allow some broker-dealers to place their servers close to the matching engine of the bourse. Shapiro is worried that this offers “significant advantages” for traders who rely on speed.

The SEC has already proposed a ban on flash trading – which gives some investors a sneak peak at open order before the wider market – and last week made three specific proposals aimed at strengthening the regulation of dark pools.

Meanwhile, with the use of dark pools and high frequency trading under intense scrutiny, Goldman Sachs – which runs the Sigma-X platform – has been defending the practices to the SEC.

In a recent memo to the watchdog, the investment bank says dark pools “are a technological evolution of classic market structure that have brought benefits to institutional and retail trading alike”.

Source: Finextra, 27.10.2009

Filed under: Exchanges, Market Data, Risk Management, Trading Technology, , , , , , , , , ,

Shanghai Stock Exchang International listing Board on track

Positive signals for an international board on the Shanghai Stock Exchange point to a nearing launch. But major obstacles remain.

A growing din within financial circles suggests China’s proposed international board for foreign company stock trading is on the runway and approaching takeoff.

On September 8, Commerce Minister Chen Deming said at an investment conference in Xiamen that China would indeed allow listings by qualified foreign invested companies on mainland exchanges.

The same day, CITIC Securities International Chairman Ted Tokuchi said at a Caijing conference that if the Chinese stock market remains stable, a first draft for board listing rules could be released after China’s national holidays in early October. The news drove the A-share Shanghai Composite Index up 1.7 percent to close the day at 2930 points.

One or two foreign companies are expected to list through the board on the Shanghai exchange early next year, announced Fang Xinghai, director of the municipal Shanghai Financial Office, while describing Shanghai’s effort to build a new trading platform during a London visit in mid-September.

In another positive signal, Caijing learned that the China Securities Regulatory Commission (CSRC) has set up a working group under CSRC Vice Chairman Yao Gang that’s specifically dedicated to the task of building an international board.

At the Shanghai exchange, General Manager Zhang Yujun is in charge of a separate working group preparing for the board’s launch. And it’s been confirmed that the yuan will be the currency for all trades.

Nevertheless, several key issues remain unsettled. Yet to be decided are questions about accounting standards, listing requirements, share sale limits, and rules governing how raised funds can be used.

Indeed, there are plenty of controversies that could affect the launch of the international board, for which an official target startup date has not been announced. At worst, unsettled issues could park the project on the runway.

Longing to List

Tokuchi said up to six foreign companies have shown interest in listing on the Shanghai exchange. These include the banks HSBC and Standard Chartered, and the stock exchange NYSE. “It is very likely that they will list in the next two to three years,” he said.

Responding to a recent rumor that a red chip company would list on the Shanghai market this year, Tokuchi said that listing may be delayed until 2010. But he said the first company to list on the international board probably will be a red chip company.

A source tied to regulators told Caijing that a stable stock market could lead to a speed-up in preparations for red chip stocks now trading in Hong Kong to join the A-share market. Reportedly, these would include China Mobile and CNOOC.

Tokuchi predicted two to three companies, including red chips and foreign invested companies, would list on the Chinese stock market next year. Over the next five to six years, 20 to 30 companies will list. And within 15 years, he said, more than 100 mature companies will have listed on the Shanghai exchange.

According to Tokuchi’s analysis, foreign companies willing to list in Shanghai are mainly multinationals with fairly big stakes in China. Companies such as NYSE and HSBC aim to further integrate China into their global strategy maps.

However, some foreign companies are quite reserved about listing in Shanghai. Key reasons include listing requirements, fund-raising target rules, share price differences and delisting requirements.

Step By Step

The public first heard an official proposal for opening an international board in April 2007, when the Shanghai Stock Exchange released a Market Quality Report suggesting a new way for overseas companies to issue A shares.

CSRC released a draft regulation for a pilot program a month later, allowing overseas red chip companies to list on the A-share exchange. But for various reasons, the red chip A-share return plan was postponed two years.

Two years passed before the State Council confirmed that Shanghai would be promoted as an international center for finance and shipping – a move that brought the idea of an international board back to the table. After that, for the first time, CSRC and Shanghai exchange officials added the international board concept to the government’s working agenda. Last May, exchange chief Zhang publicly called for steadily advancing preparations for the international board.

Tu Guangshao, deputy mayor of Shanghai and former CSRC deputy chairman, later said overseas companies should be given access to the A-share exchange as part of the city’s long-term goal to build an international financial center.

Technical Bumps
Some technical issues, such as what kind of accounting standard should be used, market pricing and whether companies on the international board should be required to invest in China, are still being discussed.

Industry professionals say it’s unrealistic to require companies to comply with certain Chinese bookkeeping rules. “It is too costly for an international company with assets all over the world to comply with Chinese auditing standard,” said Zhu Junwei, general manager of capital markets with UBS Securities.

Changing to Chinese from international accounting could cost a company from US$ 5 million to more than US$ 10 million. “This is not even a one-time charge,” Zhu said. “Every year, a listed company would have to pay auditing fees.”

A senior executive at a securities firm, who asked not to be named, said international board listings should not follow in the footsteps of so-called panda bonds — yuan-denominated bonds issued by foreign companies in China.

Friction was apparent in October 2005 when International Finance Corp. (IFC) issued 1.13 billion yuan in pandas, and the Asia Development Bank used the bonds to raise 1 billion yuan. Both offered the bonds on interbank markets.

Neither issuer would accept a Chinese regulation requiring panda bonds to comply with Chinese accounting standards. After lengthy negotiations, IFC and the bank were exempted from the accounting rule and allowed to follow international credit rating and accounting standards. But they paid a price: Their bond offers were postponed several times by regulators.

Zhang recently told Caijing, “Listed companies on the international board should comply with Chinese regulations.” But he also noted that, as the nation’s corporate and securities laws currently only apply to domestic companies, the legal framework should be restructured for foreign companies that want to list A shares.

Other technical challenges surround IPOs. Lou Gang, a China strategist with Morgan Stanley, said launching an international board would test the current system for launching IPOs.

“With too much intervention by the government, listing access has become an asset,” Lou said, adding that the current review and approval procedure has become an obvious obstacle.

China could learn from its neighbor Japan, which set up an international board in the 1980s. By 1991, up to 131 foreign companies had listed on the Tokyo Stock Exchange.

Later, with the collapse of an asset bubble, many foreign companies delisted. And in April 2004, the Tokyo exchange canceled its foreign division. It then gave foreign and domestic companies equal rights and status.

Chen Changjie, an attorney with local law firm Guangda, said Japan’s international board failed due to a complex, tedious review and approval process.

Another issue for architects of a Chinese international board is that the proposal has intensified competition between Shanghai and Hong Kong.

“This affects the status of Hong Kong and Shanghai, and which one is more important,” said a Beijing-based securities executive. “In the environment, in which the yuan currency is not exchangeable, Shanghai can hardly be called an international financial center.

“All these issues are not easily resolved in the short term,” said Lou. “So the international board does not present a rosy picture.”

Source: Caijing Magazine, 15.10.2009 by staff reporters Fan Junli and Shen Hu

Filed under: China, Exchanges, News, , , , , , , , , , , , , ,