Chinese buy-side firms are increasingly implementing straight-through processing platforms to manage their global investments, the latest example being the country’s biggest fund manager.
China Asset Management Company has automated its qualified domestic institutional investor (QDII) operations and electronic trading by implementing the Charles River Investment Management System (IMS).
Since November, China AMC’s investment and trading teams in its main offices in Beijing and Hong Kong have been linked on a single platform of the Charles River IMS to manage front-office investment operations. As of December 31, the AUM of the QDII fund, China AMC Global Equity, was about Rmb19.3 billion.
“We looked at multiple solutions through a detailed evaluation process with a view to having a solution to support our assets in order to streamline and automate our front-office investment platform,” said Lu Xiaoye, general manager in the information department at China AMC. “The Charles River IMS provides us with a platform that smoothly meets our current investment requirements.”
China AMC declined to comment further on why it chose Charles River and which other systems it considered using.
The asset manager is following in the footsteps of certain domestic peers in its software selection. China Life Insurance Asset Management Company, which signed up with Charles River in early 2009, is currently rolling out its QDII business onto the vendor’s platform. And two joint-venture fund managers, Citic-Prudential and CCB Principal, also use Charles River’s platform to manage their QDII fund products.
Meanwhile, Charles River is talking to 10 to 15 prospective Chinese clients with a view to serving both their QDII and domestic businesses, says Mark McBurnie, Asia-Pacific regional sales executive at Charles River Development.
Having opened an office in Beijing in October 2009, Charles River is looking to set up another office in Shanghai to provide Chinese language on-site support to its Chinese clients.
Moreover, several mainland asset management firms have set up shop in Hong Kong to run their international operations, which McBurnie sees as a key market segment for the company.
A renewed wave of QDII fund launches since last year has created a growing need for more advanced systems to assist multi-asset, multi-currency and cross-market asset management, and other vendors, such as Sophis, are also benefiting.
China’s State Administration of Foreign Exchange had granted quota to 87 QDII investors as of the end of September. As of January 6, there were nine outstanding QDII fund applications to be approved by the China Securities Regulatory Commission.
At China AMC, Charles River’s software interfaces with several third-party applications, including a Chinese domestic back-office system, and integrates with various proprietary systems. It also integrates portfolio management, pre- and-post trade compliance monitoring, order and execution management capabilities, centralises confirmation, trade matching, and settlement workflow, and automates the post-trade process.
Cameron Field, managing director for Asia-Pacific at Charles River Development, says: “As the QDII market in China is becoming increasingly competitive, Chinese fund managers are seeking greater efficiency and control in running their investment operations. They want to scale their business and support increasingly sophisticated products.”