World’s largest asset managers highlight post-trade collaboration and innovation challenges

Panelists argued an organisation from outside the asset management industry could pull buy-side firms together.

By Jonathan Watkins

Operations executives from three of the world’s largest asset managers believe there would be benefits from post-trade collaboration, however some are reluctant to be a first mover.

Identifying that the post-trade execution space is not necessarily an area of competition, a panel featuring BlackRock, Vanguard and Wellington discussed how collaboration and innovation can create efficiencies.

“The issue is that everybody wants to do it but everyone is afraid to be the first one in,” said Jim Kearney, global head of investment operations, Vanguard, speaking at the InvestOps conference in London. “Afraid to make the wrong decision or put their money in the wrong spot.”

“Players are contributing but I don’t think they are collaborating. That adds value to an organisation individually or fixes one little problem, but if we could collaborate better there could be a bigger solution.”

When it comes to collaboration around issues such as technology innovation, Alain Mandy, COO, Wellington Management Funds, said that it’s more likely that an organisation from outside the asset management industry could pull the firms together.

“It should not come from the asset management industry, it should come from tech companies or industry bodies to put people around the table, on data, automation, blockchain,” added Mandy.

When it comes to innovation, the emphasis from the panel was on an industry-wide open architecture, with one panellists suggest something akin to an app store for products and where the buy-side can select the services they want.

One of the largest barriers to innovations was the size of institutions, with legacy systems and the enormity of change slowing things down.

Discussing BlackRock’s own innovations, Mark Persiani, head of derivatives operations at the world’s biggest asset manager, explained that they have to be careful, given the implications of others using their services.

“Making decisions that are best for BlackRock isn’t always best for other clients on the Aladdin system,” said Persiani.

“Collaboration is a huge point where you really need to make sure you are taking a step back and building a collective process that is flexible enough across the entire buy-side platform.

“What’s best for one provider throughout the supply chain might not be best for everyone.”