The need for improved transparency is pushing Asian asset managers to use more sophisticated technology than they’ve ever used before in the management of their portfolios and to boost the overall efficiency of their businesses.
This trend is also being pushed by Asia’s intrinsic nature as a region carved up into different geographies, with different regulatory requirements, and varying stages of development in the investment cycle.
“One of the challenges is seeing the contrast between what’s driving our business in Europe versus Asia. Unlike in Europe where most of our conversations were based on regulatory drive and change, most of our conversations with asset managers in Asia have been around how technology can drive operational efficiencies,” says Steven Ioannou, global head of Bloomberg Asset & Investment Manager (AIM).
The kind of technologies that asset managers are going into are highly-sophisticated order management systems (OMS), a type of buyside platform, that allows them to manage their portfolios, their trades, and their operations at the same time. By using the OMS technology, asset managers can focus more on their strategic concerns such as operational efficiency, regulation, risk management, risk oversight, and transaction cost analysis.
In Asia, one of the key drivers for the use of this type of technology is to enhance transparency which is a broad drive that covers various aspects.
"Recently we've been talking to a lot of our clients around how they have a greater need for more transparency around research, whether its internal analyst research within their organization, or external broker research. And they want to link this across our entire buyside platform," Ioannou says.
Another trend among Asian asset managers is using technology as a way to drive transparency between what their internal stakeholders and investment teams are actually reading and what is driving their investment decision.
“Rather than hearing anecdotally, they really want to see the proof within a system using technology, to make those links,” Ioannou says.
Asset managers are also using this technology to look at broker performance which involves having all their data, primarily data on trading positions and transactions, on one buyside platform.
"That really is step one to them providing transparency and being able to very quickly identify and analyse your investment risks across an entire group or whether it's determining your broker performance. It starts with having trusted data on one platform to really provide that level of transparency," Ioannou says.
In the past 12 months asset managers have also raised concerns on how they can better cope with increasingly demanding issues involving market compliance, risk management and operational efficiency. Technology service providers are responding by coming up with technology platforms that can handle these issues efficiently at manageable costs.