All About the Buy Side in London

When you have nine-hour conference focused specifically toward the buy side, no doubt there are going to be a lot of areas covered. At this year's Buy-Side Technology European Summit, my London-based colleagues James Rundle and Marina Daras did a fine job of overseeing a wide swath of the panels.

While I was sadly unable to attend the conference, I wanted to highlight the coverage that came out of the event:

● "Buy Side Has an Eye, but Not a Finger on the Pulse, say Tech Chiefs": This post looks at the buy sides relative uneasiness with disruptive technologies, and delves into the buy side's slowly-increasing interest in Bitcoin.

Interesting Takeaway: Barney Dalton, CTO at Aspect Capital, believes that while there will be some rough seas ahead for Bitcoin, it will eventually take hold as an investment instrument.

"It's going to go through a difficult period with the regulators, but this is a classic case where technology is going to be disruptive enough that it will find a way through."

● "Keep it Real, Say Data Management Heads at BST Europe": Data quality will continue to be a pressing challenge facing buy-side firms, say panelists.

Interesting Takeaway: Even more challenging, says Julian Dorado, head of data management at M&G Investments, is convincing upper management of the necessity to invest in data governance.

"We would struggle to get the senior management to attend a meeting called ‘data governance'. But if governance is not business-driven, it has every chance of failing. You need to find a way to make it a concrete strategy for the business people as well as for the IT team."

● "Front-Office Influence Wanes in Modern Buy-Side Firms": Technologists feel that middle- and back-office support is finding a voice when it comes to investment, rather than the front office driving the area of spend.

Interesting Takeaway: At Sarasin & Partners, head of investment management applications Vipul Chandra says that they created an experimental "single implementation team" to bring the front, middle and back offices together on projects.

"It's not just the front office, then everyone in the back office who picks up the pieces. The driver now is how you bring efficiencies within the team culture. What we did as an experiment was to create one, single implementation team, which is focused on getting the orders through the system ─ fund managers can look at stock selection and where the value is, coordinate with the analysts on the research side of things, and bring in value-add very measurably."

● "Delegated Reporting not a Silver Bullet for the Buy Side": New reporting regulations from the European Market Infrastructure Regulation (EMIR) are creating a headache for firms when it comes verifying the accuracy of reports.

Interesting Takeaway: Apparently sell-side firms have not been so comfortable having buy-side institutions come in to check on reporting processes to ensure due diligence, according to Luke Ransley, an operations executive at Friends Life Investments.

From James' post: Indeed, sell-side firms not used to having their processes and sensitive structures ─ such as the locations of personnel and systems ─ examined by outside parties did not always react in a friendly manner to such enquiries, despite it being part of the buy-side firm's duty of care to make them.

● "FCA Expresses Concern over Systems Compatibility for EMIR Compliance": The UK Financial Conduct Authority (FCA) is aware of systems issues when it comes to EMIR reporting requirements, and Barry King says that the FCA is working with firms to address these problems.

Interesting Takeaway: King's takeaway on the situation: "From our perspective at the FCA, we ask firms how their EMIR implementation plan is going, and nearly always, the response is that they're waiting for release 6.2.3 from their IT provider before they can meet the requirement. They're only on release three because they didn't move up to five. It's amazed me how much we get into quite detailed discussions about the systems that firms are using, and the impact that has on meeting regulatory requirements. It's something that we've tried to be understanding about, but I think what comes through here is that an awful lot of these new requirements will require quite significant systems change, particular when you're reliant on external systems and software providers."

● "IMA Publishes IBOR Standards, but Every IBOR is Unique": The investment book of record (IBOR) debate rages on, as panelists discuss key capabilities of an IBOR.

Interesting Takeaway: The next phase of IBOR development will be around firms being able to build a pattern of what is going to happen in the future for trading desks, by using the historical data they get out of their IBOR.

● "LGIM CIO Emphasizes Change Management Integration in BST Europe Keynote": Legal & General Investment Management's Paul Stevens, CIO at LGIM, gave this year's Keynote Address.

Interesting Takeaway: Change management is vital in order to remain competitive. In order to develop comfort with change management, you need the right culture.

"I would normally say that people are the most important [factor], but in this instance, I would say that culture ─ how we do things, rather than what we do ─ is the stuff that makes the difference between change sticking, and change not sticking. There's a way to make a successful change culture, and I call it the trust sandwich, in that you have trust at both the top and the bottom. The trust at the top is what you get from management, saying they'll empower people while making the direction clear, to get things done. They don't want silos, they don't want turf wars. It also focuses on trust from the bottom, because where firms get it right, they get people at the top of the stack trusting people at the bottom, but also people at the bottom of the stack trusting those at the top. Culture sits at the middle of everything."