Despite being a growing reservoir of funds under management, this critically important pool of capital is confronting mounting problems collating and disseminating key data in a timely manner.
The ratings house is pinning its growth strategy on a revamped methodology that increases the emphasis on governance to 25 per cent – a timely move considering APRA’s proposed reforms.
Custodians move up the chain with front-office services
The days of custodians being confined to the backoffice of big super funds and managers are long gone. Through new services, they have moved up the chain through the middle office and, now, the front office. They’ll be running the reception desk, too, soon.
The latest development is from Northern Trust in the US which has launched a suite of front-office risk management data tools, which enable better assessment of external managers, including alternative managers.
While most front-office services are restricted to North America, this solution is available globally, including in Australia and New Zealand. Northern Trust has led the way with the provision of middle-office services in Australasia to complement its traditional custodian offerings in this region.
But it is not alone. Last year State Street acquired front-office information provider Charles River and has been looking to integrate that firm’s services with its other offerings. And, last week, BNY Mellon announced it had teamed up with information specialist Bloomberg in an alliance that “further integrates BNY Mellon’s data, analytics, and servicing capabilities with AIM, Bloomberg’s portfolio management, trading, and compliance solution”.
In a statement to the New York Stock Exchange, BNY Mellon said: “The connectivity streamlines data delivery between the two companies and allows clients to access BNY Mellon’s data and analytical workflow tools directly through Bloomberg AIM.”
The Northern Trust announcement said that the new suite of risk management tools would allow asset owners to review and assess the operational strengths and risks of investment managers, including those managing alternative strategies such as hedge funds, private equity funds, real assets and direct investments.
“Designed to support the needs of sophisticated institutional asset owners, the Operational Risk Management Solutions suite includes detailed operational due diligence assessments. Additional enhanced services, such as operational risk monitoring, are also under development, including capabilities for limited partnership agreement (LPA) compliance, fund fee analysis and regulatory monitoring,” the firm said.
The new business unit will be led by Vincent Molino who joined Northern Trust in July this year. Melanie Pickett, the firm’s head of front-office solutions, said: “Complex asset owners have focused their efforts around operational risk management in the decade since the global financial crisis… With our enhanced due diligence capabilities and the strong leadership of Vin Molino, the launch of Operational Risk Management Solutions marks a new chapter in Northern Trust’s strategy to support the evolving needs of asset owners across the globe, going beyond traditional asset servicing offerings.”
– G.B.
