Case Study: Fixed Income and Credit Asset Manager

A multi-billion dollar Asset Manager, who invests in all classes of investments, required order management and trade flow processing functionality for complex asset classes that could not be accommodated by existing vendor systems. 

Solution

The Asset Manager was using an in-house Order Management System (OMS) for all of their asset classes, which did not properly manage more complex asset types, such as credit derivatives and bank debt. As the fund's investment in these asset classes increased, traders found it increasingly difficult to process these trades, which required many hours of manual work every day. As the fund grew in size and trading volume, the manual processes became prohibitively difficult and error-prone.

The Asset Manager evaluated several off-the-shelf Order Management Systems and found that none of them did a good job of modeling, valuating, and processing these complex assets. Additionally, the Asset Manager needed to integrate with ICE Link for auto affirmation and to prepare for CDS Clearing. The Asset Manager did not want to completely replace their existing platform all at once, which another challenge to working with off-the-shelf systems. 

Solution

In response to the above challenge, NorthPoint implemented a parallel Order Management System that consisted of the following major components:

  • Trade Capture for multiple asset classes including credit derivatives
  • Advanced Allocation Engine
  • Security Master with integration with Markit and Bloomberg market data
  • Trade Blotter-driven integration with Imagine and ICE Link
  • Position Keeping and Reporting
  • Valuation for credit instruments

Today, the OMS is used in parallel with their other system to very quickly enter and allocated trades for credit derivatives, and plans are underway to iteratively convert other asset types over to the new system. The allocation process is also extremely flexible and robust, which reduces the amount of time traders need to spend booking and validating trading activity.

NorthPoint's Security Master and Valuation Service work together to make security definition and trade capture very fast, without the need to manage separate calculations in external spreadsheets. 

Benefits

  • Increases efficiency by removing the dependency on Excel worksheets and manual entry
  • Enables fast trade entry and allocation with minimum errors
  • Integrates completely with ICE Link to prevent confirmation errors and paves the way for CDS Clearing
  • Offers a customizable and flexible reporting and reconciliation
  • Acts as a foundation to support additional investment vehicles and assets through a scalable operating platform

 

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