May 21, 2015
Cutter Associates recently completed a study into its member firms’ use of an IBOR (Investment Book of Record). IBORs have gained broad acceptance as useful tools in the investment management community, but our study reveals that firms are using their IBOR—or even multiple IBORs—in different ways.
The core purpose of an IBOR is to help the front office make informed investment decisions, and 100% of the firms surveyed report that their IBOR is used by Portfolio Management. Some firms also use their IBOR data for extended purposes, including collateral management (80%), risk reporting (70%) and even client reporting for a handful of firms.
Almost half of the firms surveyed use more than one IBOR, and it would be easy to assume that these would tend to be firms operating in multiple global regions, using a collection of different systems to manage diverse assets. In reality, the Cutter Associates study found that half of firms operating in such complex environments use a single IBOR.
Among the participating firms, they found significant diversity in the level of information maintained in the IBOR, and in how frequently the data is updated. 60% of firms update their IBOR with start of day or end of day positions, with just 40% updating their IBOR intraday as events occur. And although IBORs with the most detailed and flexible information provide portfolio managers with the most accurate picture, only 30% of firms have IBORs supporting future position projections.
“While the concept of IBOR is not new, and the term itself has been around since the late 1990s, it’s only recently that it has been identified as an essential component of enterprise architecture,” noted Judy Blackwell, a co-author of the study. “Firms are still grappling with some of the nuances of an IBOR, and with how it should integrate with their enterprise technology and data strategies. But it’s clear that investment managers are realizing the benefits of embedding the IBOR concept in their data and applications architecture, and we expect adoption only to increase.”
The benchmarking study was conducted among a cross section of Cutter Associates clients, including asset managers, insurance companies, and pension funds. Study participants receive a full report providing custom analysis of how their firm compares to their industry peers, as well as insights critical to improving their systems frameworks and operational efficiencies. The firm is currently conducting a comprehensive benchmarking study on performance measurement and attribution practices. More information about the Cutter Benchmarking service is available here.
About Cutter Associates, LLC
Cutter Associates, LLC serves the operational and technology needs of the global asset management industry, providing clients the tools and services they need to be successful. By leveraging multi-faceted expertise and an unrivaled knowledgebase, Cutter Associates provides clients truly independent research, exclusive member-only events, custom operations benchmarking, and a global consultancy for strategic advice on and delivery of operational and technology excellence. Cutter Associates works with the world’s leading asset managers, providers and servicers. Headquartered in Hingham, MA, Cutter Associates has subsidiaries in Canada and the UK, and is on the web at www.cutterassociates.com