The ú24 billion ($37 billion) Royal London Asset Management is the first fund management company in the world to centrally match cross-border live trades using a product by Omgeo that is expected to go live among fund managers and brokers in the Asia-Pacific in September.
Julian Baines, investment servicing manager at Royal London, hopes to cut the time it takes to match trades with brokers from 20 hours to three by adopting Omgeo Central Trade Manager, a pre-trade matching service using an investment accounting system called Icon provided by Thomson Financial, in the process integrating front - and back-office systems.
Royal London kicked off sending its first CTM trades to broker Dresdner Kleinwort Wasserstein. "I've spoken with eight or nine other brokers," Baines says, "and they see this as a major step forward in terms of our ability to deliver information to them." The result: brokers will elevate Royal London in their manager league tables.
"We did not compare costs when we considered using this product," says Baines. "We took a more risk-based attitude, especially given changes coming up in Basel 2, and wanted clients to see us improving efficiency."
Centrally matching trades decreases the time involved in matching the fund manager's trades with brokers and sending them on to a custodian. Before, the average time required was 20 hours, leaving hardly any time for Royal London to manage failed trades or mismatched information. Moreover there was a manual step of resending matched data over Oasys Global, a Thomson Financial electronic trade confirmation system that is a generation behind Omgeo CTM. Baines now hopes to bring that time involved down to three hours as well as reduce manual steps in sending information.
Baines adds the firm will migrate completely from using Oasys Global to using Omgeo CTM.
Omgeo is a joint venture between Thomson Financial and the Depository Trust and Clearing Corporation in New York.
Richard Hughes, managing director for Europe, the Middle East and Africa at Omgeo in London, says the new functionality also comes with a connection between Omgeo and Swift, which is a network that standardizes electronic messages between financial institutions. Fund managers using Swift can communicate with any global custodian without having to resort to a series of proprietary systems. For non-Swift members such as Royal London, using Omgeo CTM means they can rely on Omgeo to deliver their messages over Swift to custodians, and free Royal London from having to deal with multiple custodian proprietary systems.
Hughes adds the system also now gives simultaneous access to a fund manager's branches across time zones.
An Omgeo spokeswoman in Singapore notes the cross-border as well as domestic rollout of Omgeo CTM is slated to launch in multiple Asian markets next month, but declined to identify the fund managers and brokers involved.