The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Debate Argues the Case for an Investment Book of Records

Vendors have begun to develop Investment Book of Record (IBOR) solutions and in-house teams are beginning to build them, but issues around what an IBOR should look like, how it should work and whether it will deliver benefits remain open to question.

Ian Hunt, a consultant and subject matter expert working with M&G Investment Management to develop an IBOR, presented his views on these issues at a recent ISITC Europe conference before taking part in a panel discussion on the subject. At a basic level, he noted that an IBOR is about making position data consistent, complete and timely for investment managers. He questioned why position data is not quality managed in the same way as market data, and warned of the risks of poor position data, such as the marketing risk of publishing inconsistent data and the compliance risk of using the wrong position data.

Hunt described the typical derivation of position data from end-of-day accounting systems, a process that makes intraday positions presented in the front office an incomplete, real-time update of a partially enriched and retrospective end-of-day view.

Noting the need to move on and ensure integrity in records used for investment and regulatory compliance, he proposed a single source of position data that cuts through the diversity of event types to deliver a generalised IBOR. This, he said, would create certainly around the impact of using position data.

A vendor IBOR solution, he suggested, should include a single, consistent source of position data for all applications and a workflow platform for data quality management. It should not be based on an accounting solution or a transaction processing application. With this kind of solution in place, information management and risk systems could use an IBOR rather accounting data and a database could be populated to provide accurate position data for business intelligence and decision making. This type of solution, said Hunt, would provide more accurate, complete and consistent data for the front office and require less work on position data in the back office.

Convening a panel discussion on the potential of IBOR, Alan Towndrow, group IS director at M&G Investment Management and lead of the company’s IBOR project, asked whether an IBOR will become a prerequisite for business. Geoff Harries, global head of asset servicing at DST Global Solutions, said he expected this to be the case, but that the IBOR concept is in the early adoption stage and it will take five to ten years and a step change away from accounting for it to become a de facto business standard. Igor Lobanov, enterprise architect at L&G Investment Management, agreed, suggesting IBOR will be adopted as it will be difficult to scale investment business without a central position data solution. He went on to describe a working group of asset managers that is looking at how IBOR can best be developed and commented that IBOR could become a commodity, off-the-shelf product.

While vendors have yet to complete IBOR products, Towndrow questioned take-up as the internal sale of something that is already perceived to be in place can be difficult. Paul Westgate, product manager at Linedata, said the cost of how position data is derived in the current environment and the cost of compensation when position data is wrong could swing the balance and redirect investment.

Ending the session with an interactive question and answer, Towndrow asked: “Is your firm considering an IBOR?” Some 28% of audience participants said yes, their firms are considering an IBOR now; 9% said they are looking at IBOR in the long term; 32% said they are watching developments; 18% said they already have sufficient overview of positions; and 18% said IBOR is just another acronym.

Related content

WEBINAR

Recorded Webinar: Balancing Regulatory Transparency with Data Protection

You can listen to the recording of this webinar by registering on this page. Balancing the use of personal data required by Markets in Financial Instruments Directive II (MiFID) as part of its transparency regime with the personal data protection rules set out in General Data Protection Regulation (GDPR) is a tough task – tell...

BLOG

Alveo Integrates ULTUMUS Index and ETF Managed Data Service with Prime

Alveo and ULTUMUS, an exchange-traded fund (ETF) specialist, have partnered to bring together Alveo’s data mastering solution, Prime, and ULTUMUS’s global ETF and index managed data service. The partnership aims to enable Alveo customers to integrate index and ETF information more quickly, and allow ULTUMUS’s clients to enhance their data mastering and data integration capabilities....

EVENT

RegTech Summit New York City

Now in its 5th year, the RegTech Summit in NYC explores how the North American financial services industry can leverage technology to drive innovation, cut costs and support regulatory change.

GUIDE

GDPR Handbook

The May 25, 2018 compliance deadline of General Data Protection Regulation (GDPR) is approaching fast, requiring financial institutions to understand what personal data they hold, why they process it, and whether it is shared with other organisations. In line with individuals’ rights under the regulation, they must also provide access to individuals’ personal data and...