May 142012
Recent research and client assessments highlight the challenge of outsourcing effectively. Although many investment firms outsourced five or more years ago – and some have even moved to second generation models – many are not reaping the expected benefits.
Efficiency factor
We know from our research into Business Efficiency that leading investment managers achieve a cost/income ratio of circa 55% or better (see chart). Continue reading »
OTC markets are defined by flexibility and dynamism and therefore do not fit well into an organised, controlled and standard model.
Although there is global political will to enforce regulation by introducing central counterparty clearing for all OTC derivatives, there is already some relaxation of the coverage. The net result for investment managers will be a mixed operating model where some OTC derivatives are managed through bilateral agreements with counterparties and some through central clearers. Regardless of the model, there will be an increased requirement for more stringent reporting.
In Australia the regulatory council has raised general concerns about relying on overseas clearers and at the very least, it would appear that they are promoting an agenda of local clearing of interest rate swaps (IRS). Continue reading »