Increase operational efficiency
Smooth workflows AND the best functionality – have your cake and eat it too [Why we partnered with Qontigo Axioma]
When it comes to Front to Back or Front to Middle Office workflows and systems, you are often forced to choose between the best functionality (best-of-breed) or the best workflows (all-in-one). We believe you shouldn't have to!
In this article, we discuss both options and their respective pros and cons. We then explore how integration is the challenge that has caused the options to be mutually exclusive historically for you as an Asset manager or Asset owner.
As you might know, Limina was founded due to frustrations with systems that did not talk to each other well. The team at Limina were investment managers ourselves, across the globe in cities like London and New York, managing different investment strategies. We felt the pains of unreliable connectivity and workflows that spanned multiple systems that didn’t quite talk to each other. View a short video on the vision behind Limina below:
The Qontigo (now SimCorp) partnership is a critical step in achieving the vision of “no more fragmented workflows”. At the end of this article, it’s our hope that it will be very clear why – and what it might mean for you!
Why bundle an Order Management System with a Risk and Performance Attribution System
The appeal of Front-to-Mid (F2M) and Front-to-Back (F2B) Office systems is that it reduces the need to integrate solutions; avoiding costs and risk around integrations. The disadvantages are the natural opposites, i.e. you get locked in with one vendor for everything from change management as you launch new products to re-negotiating terms.
94% of asset managers have Front-to-Back workflows spanning multiple systems
Only 6% choose an All-in-One system, i.e. not going for a full Front-to-Back software. This means you are likely one of the 94% buy-side firms who are struggling with fragmented workflows spanning multiple systems.
The benefits with a multi-system setup
The primary benefit with a multi-system setup is that you can choose the systems that fit your business best – and change that ecosystem of software over time, being flexible and nimble as requirements change.
How to achieve end-to-end workflows with a multi-system setup
You can achieve smooth end-to-end workflows with an integration investment management solution. With more capabilities from one vendor, the costs and risks of integrations can be kept minimal or even removed altogether. Let’s look at a concrete example in terms of Order Management Systems (OMS) and Risk Systems:
Let’s first assume that Portfolio Analytics is performed by the Risk System on an instrument level. The OMS can then leverage those analytics by scaling with position sizes. This can be done in real-time without having to force data or users to go into the risk system. As a result, workflows are smooth with low operational risk. This approach requires a deep integration managed by the vendor to work (which is what the Limina and Axioma partnership offers).
Why Limina partnered specifically with Axioma Risk
Below is the breakdown of why we at Limina picked Axioma's Risk models for risk and performance attribution capabilities:
1. Best in class Risk and Performance Attribution functionality
Qontigo Axioma offers one of the highest flexibility and variety of risk modelling on the market, which means portfolio managers can choose the risk/perf philosophy suited for each of your investment styles. The functionality includes:
- Risk analytics tailored to meet asset and portfolio specific risk measurement needs
- Flexible factor modelling
- Full repricing using both Historical and Monte Carlo methods
- Risk decomposition across a wide range of factors
- A sophisticated stress testing and scenario framework
- Factor and Granular model risk analyses
- Performance attribution
Learn more about the Investment Risk Software offering.
2. Integration capabilities
Axioma Risk™ is a cloud system with modern web service APIs, which makes the integration faster and more robust for clients and users. More explicitly, the APIs facilitate single security and intraday calculations, making sure your portfolio managers are not frustratingly waiting for batch processes to finish.
3. Commercial model
With the partnership, clients have a single point of contact for all enquiries including support. We take full responsibility for the integration and functionality, to remove the risk of you as a client becoming squeezed in the middle of two vendors.
Summary
We hope that this article has given you a better understanding of why 94% of asset managers are choosing the multi-system path, what challenges that creates and how to overcome them. In light of this, we hope to have clearly explained how the partnership between Limina and Qontigo (SimCorp) fits into this picture – allowing you to access the best functionality to support your investment decisions and business development with minimal operational risk.
