SimCorp Poll Reveals Continued Failures in Buy-Side Derivatives Processing

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- Eighty-two percent of buy-side firms must create workarounds to support derivatives

- Over 50% require at least two months to launch new investment products

SimCorp, a leading provider of investment management solutions and services for the global financial services industry, today released the findings of a poll conducted last month. Responses came from nearly 135 executives from 84 North American-based capital markets firms.

A concerning number of buy-side firms still rely on legacy systems even as they seek to generate alpha through alternative investment strategies. When asked if their firms need to create workarounds to support derivatives in current middle- and back-office operations, 82% of respondents said yes. Additionally, over one-third of respondents admitted that the accuracy of client reports is compromised due to the need for extensive workarounds.

Buy-side respondents admitted that legacy systems hamper new product time-to-market, compromising competitive advantage. Fifty-three percent revealed that their systems require at least two months to model and launch new derivatives products and sometimes significantly more. For 22% of firms, this takes a minimum of four months. Only 24% can roll out a new offering within one month while 4% are entirely unable to launch new products using their current systems.

“The risks associated with legacy technology platforms are real,” explains Paul Migliore, CEO of Citisoft, Inc.. “Traditional, long-only investment platforms were designed to support a specific sets of functions such as order management or accounting. The demand for alternative assets and innovative products has outpaced the technology platforms that are currently utilized in most investment management firms. Buy-side firms must transition from legacy platforms to state-of-the-art systems that broaden their asset coverage capabilities, especially in derivatives, and enable user control for queries, data access and reporting.”

According to David Kubersky, Managing Director of SimCorp North America, “The number of buy-side firms 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.  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. Additionally, this system should offer integrated workflows in managing cash, margins, deliverables and collateral, accurate reporting and the ability to quickly introduce new products to market.”

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Enquiries regarding this announcement should be addressed to:
Susan Peter, SimCorp North America (+ 1 917-546-4654)

Media Contacts:

Kevin Maher/Angela Byrne, Cognito (+1 646-395-6300), simcorp@cognitomedia.com

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About SimCorp

Since 1971, SimCorp has been providing investment and portfolio management software and services to the world’s leading investment managers, asset managers, fund managers, fund administrators, pension funds, insurance funds and wealth managers. SimCorp’s world-class software provides global financial organizations with the tools they need to mitigate risk, reduce cost and enable growth. SimCorp is a global company, regionally covering all of Europe, North America and Asia Pacific. Listed on the NASDAQ OMX Copenhagen, SimCorp is dedicated to supporting the global investment management industry, its clients and its investors.

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