F&C Consolidates Front and Middle Office Technology
Excerpt from a Funds Europe case study of F&C Asset Management’s successful implementation of Charles River IMS to support its Pan-European investment management operations.
F&C Asset Management, the UK-listed asset manager with approximately £103 billion (e137bn) of assets under management, has combined most of its front and middle office IT systems across its European business with one provider.
The decision is further evidence of the demand by asset managers to consolidate different asset classes, along with front, middle and back office operations, onto one technology platform. The F&C consolidation spans equities, fixed income, derivatives and unit trusts. The project centres on order management and a range of other functions.
Charles River Development, the US-headquartered technology provider to investors, won the contract after a tendering process led by Morse, an investment management consultancy.
Over 100 F&C users in Amsterdam, Dublin, Edinburgh and London now use Charles River Investment Management System (Charles River IMS). According to Charles River, this system offers F&C enhanced decision support, streamlined trade order management, and real-time pre- and post-trade compliance testing and monitoring, all on a single integrated platform. To that extent, it integrates a large portion of F&C’s front and middle office processes.
Luc Leclercq, F&C’s head of operations, IT and projects, told Funds Europe that F&C wanted one system to cover all of F&C’s asset classes. He added: “The criteria was formed by a number of things. Overall we wanted a platform that could deal with the demands of the business and which was scalable. We also wanted to reduce our operational and IT risk.”
Charles River IMS replaced three other front office systems, including Linedata Services’ LongView product, which is an order management system, and a DST International product. The previous providers were included in the tendering process.
“We had two dealing systems, different portfolio management systems and one mandate checking system,” said Leclerq.
The merger between F&C and Isis Asset Management in 2004 – which led to F&C becoming the fourth largest UK-based asset manager and a top-ten manager of pension funds in Europe – led to this residue of systems.
“It was coming out of this at the beginning of 2006 that we wanted to review the front office,” said Leclercq. The review began in April 2006 and the front office implementation is now complete. “With Charles River IMS, we have already realised significant cost savings by streamlining our equity, fixed income, derivative and unit trust dealing and compliance operations across Europe,” said Leclercq.
He added that the front office project was critical to F&C’s strategic direction and that it was delivered on time and on budget. F&C used a consultancy because they offer “a niche knowledge that you don’t necessarily want to buy in for the longer term”.
Following the front office implementation, a further stage of implementation for the broader project is now taking place, which will extend to portfolio modeling for complex derivatives and will also result in greater pre-trade compliance support for fixed income operations.
F&C has also looked at the scalability of its execution management system (EMS), but Leclercq said a deeper study of this will take place at a later date. Charles River Development’s Jon Steward, managing director, EMEA, told Funds Europe that Charles River has been building out EMS capability, such as algorithmic trading and direct market access, and that version nine of its IMS to be released by the end of the year will incorporate more of this functionality.
A number of technology shops like Charles River and Linedata are promoting multi-asset systems as fund managers employ greater use of derivatives and as they seek broader operational efficiencies.
Derivatives have so far been a difficult barrier to a complete enterprise solution.
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