Citisoft is in the service business. As a service to our clients, our firm is filtering out 'the noise' and providing you a snapshot of the pertinent and unique content that is affecting the buy-side this week.
The public comment period for the final design of the Volcker Rule is underway. While already a hot button issue, this comment period has allowed some to reset their position that the rule's intent is looking to solve the wrong problem. Here's a good read from the WSJ on whether Volker should be looking to restrict long term prop trading as opposed to short term.
In the same thread, The Economist provides their overview on the future of the Dodd-Frank legislation.
While TPG, the North American-based buyout firm, was reportedly close to acquiring GlobeOp earlier this month, it appears that SS&C is also making a move on the hedge fund administration provider (via BBerg). This transaction appears to be good timing for both GlobeOp and its eventual acquirer as consolidation amongst the hedge fund service providers has already begun and GlobeOp is one of the larger players in the marketplace. If TPG completes the transaction, I would expect this to be a shorter term play with a quick turn around.
- Paul Migliore
Here's a list of the "Most Annoying, Pretentious, and Useless Business Jargon" as complied by Forbes. While this is intended to be funny, we actually take this to heart as there are many known consulting "terms" included (ed. note: marketing is currently scouring the website for some of these...). I found it humorous but very accurate with my ultimate pet peeve, "Best Practices," being on the list.
Paul Migliore
Sell-side institutions are in the process of winding down, spinning-off, or migrating their proprietary trading operations with the Volker rule set take effect in July (final draft still outstanding). One of the many questions that still requires resolution: Is there one evolutionary path that makes the most sense? Citi is winding down (via NYT) their unit, Morgan Stanley plans to spin it’s desk off, and it appears that UBS will try to evolve it’s operation into an asset management entity (BBerg).
It’ll be interesting to watch if UBS or others can pull this sell to buy-side transformation off. Certainly, there are major differences in how a firm manages its own funds versus its client’s. But the technology and operations that a firms uses to support the business will present a significant challenge, as well. Sell-side technology has always been both (1) a step ahead of the buy-side due to levels of tech investment and (2) not always easily modifiable to support full buy-side requirements. Will this capability be a help or a hindrance to the firm’s future plans? Just another log to throw onto the fire as firms evaluate these complex decisions.
Ben Keeler
Citisoft is hosting buy-side industry executives for a research presentation and discussion on "Investment Operations Outsourcing: Trends & Suitability." This breakfast session will be held in Boston on March 1st, 2012 with discussion topics including:
Event Details:
When: Thursday, March 1st, 2012
Time: 8:00 - 10:00 am EST
Venue: Boston College Club - 100 Federal Street, 36th Floor, Boston
Who's Attending: Senior managers from leading investment management organizations
Note: Service providers and vendors are encouraged to contact Citisoft for more information about Citisoft's outsourcing services, but this event is intended for buy-side practitioners only.
In conversations with a client this week, it became apparent that there is a complacent attitude towards the potential break up of the Euro in many firms as “it is only Greece and our exposure is light” per this industry exec. Whilst understandable, they are missing the point. We posted our detailed thoughts on how investment management firms can prepare last week and ISS magazine has an interesting article that fits in with our views on this subject. If Greece leaves the Euro, the precedent of countries leaving is set and therefore the chance of other, higher profile countries leaving is increased. It is our view that all firms must have a contingency plan in place to address the significant operational issues that will arise. When the euro was established, it was a well-signalled and strongly documented process which was relatively easy to follow. It is extremely unlikely that any departure will be dealt with in the same manner. The time to assess the impact and deliver a prudent and thorough plan is now.
- Steve Young
SEI recently released a survey on the trends, traction, and outlook for institutional hedge fund investing. A full copy can be found here. This is a deep piece but offers some good perspective on the drivers of institutional investment. Highlights include: