Middle Office Outsource
Case Study
Objective & Scope
A global investment manager planned to transition US and Canadian middle office operations from in-house function to State Street Bank.
Combined US and Canadian AUM of $175b and 1,100 accounts. Account base included approximately 400 US and Canadian mutual funds and ETFs. Segregated accounts ranged from high net worth to institutional pension accounts. Full range of asset classes including OTC derivatives and leveraged loans.
Challenges
Trade data generated from three different OMS platforms. Complex data structure using an enterprise data management platform as central data hub to send and receive trade data to and from State Street. High degree of precision and data clarity required.
Trading platforms for mutual fund of funds were not conventional. Requirement for NSCC had to be met via third party provider and coordinated with State Street.
Leveraged loan administration and processing required a customized work-flow to accommodate unique settlement requirements as well as compliance monitoring for CLO vehicles.
Significant revisions required to operational process to convert from middle office execution to outsource oversight.
Approach & Process
Planning & Analysis: Early planning stage included gap analysis where the manager’s process and workflow were documented and compared to State Street’s operational process. Gaps and known differences were identified. Solutions were researched.
Design & Solution Build: End state operating model was designed. Procedures, training, SLAs were developed. Detailed process walk-throughs with State Street were conducted for all operational processes.
Testing & Conversion: Successful data and systems testing were conducted (JSIT/CUAT) along with dry runs and dress rehearsal. Data user acceptance tests were created for all asset classes and test a range of scenarios.
Result
The investment manager successfully transitioned middle office operations during Q4 2019