Cathay Conning Asset Management has begun operations in Hong Kong by outsourcing its middle office to Citi. It made the decision in part because of the speed with which Citi could get its operations up and running.
According to Citi, its securities and fund services unit was able to deliver a full-service outsourcing service in a five-week timeframe, from a standing start to active trading, which the bank says is a record for the region.
Mark Konyn, CEO of Cathay Conning, says choosing an outsourcing partner was a core decision in the establishment of the firm, a joint venture between Cathay Life Group in Taiwan and US-insurance asset manager Conning Asset Manager.
Konyn credits the speedy set-up to close cooperation between the two firms’ teams. “Citi has the global reach and in-country footprint that meets our needs and we look forward to leveraging all resources as our business expands,” Konyn says.
Citi will provide Cathay Conning with daily operations, data management and administration technology. David Russell, regional head of securities and fund services, says Citi’s existing technology platform allowed it to hook in Cathay Conning with an order management system under tight deadlines.
Now that the fund house is executing trades in Hong Kong, it is expected to use Citi to expand its operations around the region – to similarly strict deadlines.
Citi officials say that, unlike most cases of outsourcing middle offices in the region, this is the first time a start-up has sought to launch with end-to-end processing handled by someone else.
This reflects the high, variable costs of administration, compliance and other functions, not to mention the burdens of a tech budget. The bank expects more outsourcing as fund managers seek to manage their operational efficiencies and costs.