About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

How Automation is Impacting Asset Manager Workflows

Subscribe to our newsletter

Leon Brown, Account Manager at BidFX, explains why asset managers are increasingly looking at automation for enhanced productivity, as opposed to cutting headcount.

Popular opinion now agrees that automation is not a nefarious ploy to reduce staff headcount, but an intelligent business decision designed to increase efficiency and enhance productivity.  In the early days of sell-side eFX, the initial resistance from FX sales staff was due to their fear of ‘computers taking our jobs!’ but the reality was that simple processes like buying and selling currency at spot were transferred to the client for electronic execution, and bank staff were able to concentrate on revenue generating activities such as producing trade ideas and growing relationships with their most valuable clients – increased efficiency, enhanced productivity.

An asset managers’ workflow similarly has many opportunities to create new efficiencies and the pace of change is increasing. Asset managers static workflow currently utilises a minimum of two systems to get FX orders executed. Their Order Management System (OMS) being one, and the Execution Management System (EMS) being the other.  This number increases if spreadsheets are used anywhere in the process and if a separate booking software is used post-trade.  All these systems create multiple opportunities for human error which can end up being costly in both time and money.  Pre-trade allocations have become easier with improvement in the quality of OMS software but can still be time consuming.  And if we revisit the revenue generating activities idea mentioned earlier, most Asset Manager scenarios don’t use FX for speculation purposes – it’s purely the ancillary, or hedging, part of an Equity or Fixed Income process.  Some trades are so small or insignificant that they cost more in time taken to check, enter, re-check and execute them than they produce in cost benefit for the firm.

So, to help their Asset Manager client base to increase efficiencies and enhance productivity in their workflow, there needs to be infrastructure that allows for multi-layered automation that can take an order directly from the OMS, shape it, execute it and book it with one click of a button.  The decision-making tool to merge trades is called a Shaping Plan and it can take many forms.  All shaping plans are established in co-operation with the client and a typical one might include auto netting, rationalising deal types, specific currency pairs/number of LPs/sizes, defined weightings, etc. All this automation also needs to meet full allocation workflow and connections to their OMS.

The options are endless.

Of course, every trading system needs to be tested and refined over time and it’s the reason why extensive work is done in test environments to ensure optimum performance before making a seamless transition into a clients’ production environment.  The setup of these automated workflows takes time and patience, but they should be likened to sharpening the axe before chopping down a tree.  The time taken to get it right at the start will save considerably more hours into the future.

Automation was once ‘something that’s coming’, something for ‘the future’ but the future is here and it’s happening now!  It is creating efficiencies of both time and resources for either complex scenarios or laborious ones. And where Asset Managers are concerned, the acceleration of interest is very clear to see from our vantage point.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: The emerging structure of the institutional digital assets market

As interest in trading digital assets continues to increase among institutional investors, so too does the need to focus on market structure, regulation and trading solutions. For financial institutions that get it right the rewards will be significant, but it is not necessarily easy and the challenges are many. This webinar will consider how digital...

BLOG

TMX Group Unveils Two New Order Books to Democratise Speed and Improved Execution Quality

TMX Group has introduced two new equities order books on its Alpha trading platform, Alpha-X and Alpha DRK, in a move that aims to democratise speed of access and improve execution quality for natural order flow on the Canadian market. The launch of the two new order books promises a more optimised trading environment that...

EVENT

Data Management Summit New York City

Now in its 14th year the Data Management Summit NYC brings together the North American data management community to explore how data strategy is evolving to drive business outcomes and speed to market in changing times.

GUIDE

Corporate Actions Europe 2010

The European corporate actions market could be the stage of some pretty heavy duty discussions regarding standards going forward, particularly with regards to the adoption of both XBRL tagging and ISO 20022 messaging. The region’s issuer community, for one, is not going to be easy to convince of the benefits of XBRL tags, given the...