Accurate accounting data has become a priority for asset managers and their clients since the credit crunch. The technology they use must be robust enough to guarantee there are no errors. With this in mind, it is not surprising that this year’s winner of the Custody Risk European Asset Servicing Technology Vendor of the Year award was industry veteran DST Global Solutions.
Its main fund accounting solution – HiPortfolio – has been in operation for more than 30 years and now services third-party administrators and asset management firms in more than 35 countries. The system now has more than 160 clients across the globe with more than 7,300 users of the solution.
Part of DST Global Solutions’ skill has been to adapt the system to changing client needs. The group has a target research and development spend of 12–15% of revenue, which included nearly 7,000 days’ effort for the HiPortfolio solution during 2010.
Its lengthy track record, adaptability and market knowledge have all contributed to the winning and retention of clients in 2010. In a difficult market environment, client count has remained unchanged, with the user count increasing to just below 2% as the group took on larger clients.
One new client said that using an established system – also used by its licensed custodian – facilitated considerable technology efficiencies for them.
The group’s implementation track record has also been a key selling point. A number of potential clients have found that DST Global Solutions has been the only group able to deliver within their tight deadlines.
One of the particular advantages of HiPortfolio has been that it has an integrated net asset value (NAV) calculation capability. This is user-defined, which means that clients can adhere to different NAV requirements within a single application and changes made to the underlying investment data will be seen in the NAV immediately.
“This process is further supported by an extensive user-defined reporting and attribution capability allowing users to trace and identify the causes of fluctuations in the NAV from one period to the next,” a company spokesperson explains.
Technical skill has also been important – one client sought to improve the management of cross-investment processing and reduce operational risk, and the adoption of HiPortfolio enabled them to manage this. Another client required a system to manage domestic and international portfolios and to improve efficiency as business expanded. It was important for them to be able to access data in real time, reliably and consistently, so HiPortfolio fitted the bill.
The system has seen a number of innovations in 2010, as use of over-the-counter (OTC) derivatives has increased among asset managers. DST Global Solutions has extended its support for OTC derivatives to include corporate actions on derivatives, netting arrangements and the ability to store new analytics.
In June, it launched OTC Lifecycle Manager, which was released as regulatory scrutiny on derivatives increased. It was designed for the middle office of the buy side to improve visibility and control throughout the life of a contract. Asset service providers – using several staff to manually process a small to medium number of derivatives trades – now had the option of using a single tool that would also minimise problems with data quality.
According to the company, the introduction of a reconciliation module also allowed the process to be streamlined and provided for greater operational efficiencies by minimising the number of external utilities and operations that were required.
The system has seen other adaptations to accommodate regulatory changes – in particular, it has been enhanced to include Australia’s Taxation of Financial Arrangements. This legislation had brought about some significant data and reporting hurdles, which the system changes helped client firms to manage.
The group’s Tax Parcel Optimisation accommodates regulatory change, therefore helping clients minimise their exposure to capital gains tax when operating at a consolidated level. It is designed to reduce risk in the process and makes reporting and account preparation more efficient and consistent.
DST Global Solutions has also introduced a reconciliation module, which extends the flexibility and options available to clients. It allows the process to be streamlined and provides for greater operational efficiencies by minimising the number of external operations required.
The latest version of HiPortfolio also includes enhancements to technical, functional and operational areas of the system. Market coverage has been extended to areas such as index-linked instruments in the UK, and the system can now support non-standard interest rate frequency and coupon reset periods for swaps. There have also been changes to meet specific market requirements in China, included in this release.
Improved performance, enhanced controls, extended integration and greater data accessibility have also been delivered with the latest release.
Data integration capabilities have been extended to allow greater automation and exchange of data between applications as well as facilitating the new client process. In addition to these advancements, the automatic generation of data required to support backdated data entry operations for dependent applications has been automated.
The judges also took special note of how DST Global Solutions had added to its middle-office analytics offering – Anova.
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