Over the past few years, we have seen the middle-office landscape shift drastically as it responded to the evolution of best practices, improved institutional due diligence requirements and expansion of alternative products and strategies. As managers now navigate remote working environments, these factors are further amplified, resulting in fragmented firm-wide communications and high fixed costs.
Looking ahead, managers can mitigate these concerns by outsourcing middle-office operations. Prior to activating this strategy and deciding to make the critical move forward, managers must first understand the benefits and core functions that can be outsourced. Key outsourced functions include:
- Trade Processing (capturing, booking, confirmation & settlement)
- OTC Confirmation & Settlement
- Corporate Actions Processing
- EOD P&L Calculation
- Asset Life Cycle Management
- Option Booking (exercise, assign & expiry)
- Swap Resets & Settlement
- Loans Processing (PIK, paydown, interest & contract rolls)
- FX Hedging
- Cash Flow Projection
- Credit Facilities
- Pricing
The above functions vary from organization to organization. Although some managers are well equipped to perform all of the above functions in an effort to efficiently run their operations process, many fail due to the following reasons:
- Need for Unique Expertise
- Time Consuming
- Lack of Investment in Technology, Operations & People
- Risk Associated with Poor Data Management
Rather than investing capital in creating an internal middle-office operations team, it is advisable to outsource as it can provide a number of benefits such as:
- Streamlined processes and procedures executed by a team of experts
- Time for managers to focus on value-add opportunities in other areas
- Effective
- Faster availability of required information to make key business decisions
- More efficient in highlighting and rectifying errors
Read how IVP Managed Services can help activate middle-office outsourcing strategy
