Age Bakker, COO of Storebrand Kapitalforvaltning in Olso, warned against creating a generation of “Excel professors” as front office pressures to implement new asset classes leaves the back office dependent on manual processing techniques.

Mr Bakker saw demands increasing, both in terms of new and more complex types of financial instruments, more demanding reporting, and polarisation between plain vanilla and complex instruments, in other words, instruments with high straight-through processing (STP) rates and those with low STP rates.

Keith Whitelock, managing director of outsourcing operations at BNY, said that data based on seven outsourcing clients over 20 operational functions, showed that clients preferred a highly modular approach, with significant differences in the extent to which asset managers outsource.

Two clients outsourced all functions, he said, while the lowest was 50 per cent of functions. Most keep responsibility for regulatory reporting, he said.

Mr Whitelock mentioned a number of drivers for growth of new products, among them demand for improved returns, diversification of portfolios, and Ucits III, which allows greater investment in derivative instruments. He also said that hedge funds were providing significant growth in outsourcing business.

Speakers also mentioned the need to train and retain good quality staff as a key trend in the industry. Jean Sonneville, managing director of ING Asset Management Europe, said that the MiFID directive and other regulation threatened to leave asset managers with more staff in their risk, compliance and legal operations than fund managers.

ABP’s director of operations, Ruud Gilissen, also said he viewed the changing environment as an opportunity to develop long-term relationships. He believed there are opportunities in using retired employees, and cited the example of retired front office staff who could perform diligence of external managers better than recently qualified accountants.

Attendees at the conference were also offered industry leaders’ thoughts on the recent European Commission white paper on Ucits, which, among other recommendations, signals a private placement regime for alternative investments.

Stefan Matthias, secretary general of the European Funds and Asset Management Association, called for a middle way in asset management regulation: “As little regulation as possible but as much as necessary”.

LK

BNY/Mellon set to merge

The Bank of New York and Mellon Corporation have also announced that they are to merge, creating the largest asset management and securities servicing company globally.

Speaking with nrpn, Birger Gezelius, head of Nordea’s financial institutions division, said that he expected business as usual for his firm’s Nordic global custody marketing alliance with the Bank of New York.

Mellon has a custody joint venture with ABN Amro, based in the Netherlands.

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