Majority of buy-side companies are selecting workaround solutions for derivatives modelling and processing instead of consolidating to one system, according to a survey by investment management solutions provider SimCorp.
Of about 135 executives from 84 North America-based capital markets firms surveyed, 82% of respondents said they must create workarounds to support derivatives in current middle- and back-office operations.
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The report says that 53% of the respondents believe that their systems require at least two months to model and launch new derivatives products and sometimes significantly more while for 22% of firms, this takes a minimum of four months.
Only 24% said they can roll out a new offering within one month while 4% were entirely unable to launch new products using current systems.
SimCorp North America managing director, David Kubersky, said the number of buy-side companies still attempting to process derivatives on disparate legacy systems is troubling given the system deficiencies that were exposed during the financial crisis.
"Manual processing and costly errors hinder vital business growth. Processing derivatives on state-of-the-art technology systems enables asset managers to boost return rates and deliver the transparency and accuracy that investors demand," Kubersky said.
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By GlobalData"A state-of-the-art system should include an investment book of record (IBOR) that serves as a single source of truth from front- to back-office."
Kubersky noted that the system should additionally provide workflows in managing cash, margins, deliverables and collateral, accurate reporting and the ability to quickly introduce new products to market.
