UK asset manager Hermes Investment Management has extended its outsourcing contract with Northern Trust to include its middle-office operations.
The new mandate extends Hermes relationship with Northern Trust by another five years.
“It is imperative that we partner with a provider who can meet the demands of our business, and look forward to continuing to collaborate with [Northern Trust],” said Ian Kennedy, chief operating officer, Hermes Investment Management.
Northern Trust has acted as Hermes outsourcing provider and global custodian since 2008.
The new mandate will fall under Northern Trust’s Investment Operations Outsourcing (IOO) service, which caters for asset managers outsourcing either their entire middle-office or components of it such as trade processing, collateral management, or book of record.
“We work closely with our clients to deliver solutions that support their specific and evolving requirements and our middle-office outsourcing solutions are just one example of how we help take away the administrative burden from our clients so they can focus on their core business,” added Clive Bellows, head of global fund services, EMEA, Northern Trust.
As of the end of June, Northern Trust has 50 full IOOO relationships and 58 component outsourcing relationships with $3 trillion in assets under administration on behalf of these clients.
Middle-office outsourcing has been highlighted as one of the most preferred methods to cut costs at asset management firms, as margins continue to be squeezed by regulatory costs and fees.
Some custodians have sought to integrate the middle-office into a full front-to-back outsourcing solutions, with the aim to cover the entire pre-to post-trade process.
BNY Mellon, JP Morgan and Societe Generale Securities Services have been among those custodians that have specifically targeted the middle-office as an area for growth.
Most recently, investment management front-office service provider Charles River Development partnered with Broadridge to round off its middle-office services for buy-side clients.