‘Front-Office First’ Approach Sought For Investment Research Management/Monitoring

By Henry Price, CEO of Red Deer


In this article Henry Price responds to FCA Chief Executive Andrew Bailey’s keynote speech on MiFID II at the European Independent Research providers association today.


Ongoing client issues:

Where investment managers have implemented legacy or non-compliant systems, or attempted to solve a problem manually, there is now a significant push to use technology to solve these problems effectively and efficiently. Research managers and their teams are being asked for greater business intelligence to drive the decision-making process, but there’s a fine balance to achieve between front office effort and quality of data, and effort on an overloaded back-office. Managers are looking for an unobtrusive ‘Front-Office First’ approach.

Clients are increasingly looking to track corporate access management using similar tools to research interactions. We have recently released features around attestation, verification, reporting and alerting that have been requested by clients to allow them to manage and report – in both a consistent fashion to reduce the risk of non-compliance and with minimal extra effort.

We are still seeing the requirements for board and investor research reporting evolve as our clients start to see meaningful data from a year’s consumption. MIS is quite addictive once you have accurate data, but the opportunity to extract insight still has not been fully tapped. We have seen some really interesting developments in the front office recently, from some of the more detailed internal consumption data.

From the research provider side, as expected, we are still seeing issues with the accurate collection and reporting of data. This data can be useful in analysis, particularly for comparison prior to a vote or research agreement discussion, but there is still no substitute for buy-side tracked data when it comes to creating meaningful MIS for boards or investors.

There is a broad hope amongst the buy-side community for greater standardization in charging methodologies, but this may take longer to pan out. In addition, we’ve already started to see clients and prospects looking to make changes to their global processes as a result of their learnings from their MIFID implementation, including better valuation and voting, better data capture and the resulting improvement in the quality and value of management reporting, and their relationship with providers.

The possibility of MiFID III:

Any additional regulation is unlikely to be as broad in both scope and scale. While it’s likely that the existing rules will be finessed over time, funds need a transition period to address the impact of the current regulation, to make sure that they can manage any further changes from an operational perspective. The solutions we’ve built for MIFID II record and report data flexibly and in a granular way, so we do not foresee significant impact from further changes – for clients or ourselves.

Absorbing research costs vs charging investors:

We have a variety of clients, each of which have decided on the most suitable approach for their investors and themselves. Both approaches have led to an increased desire for understanding of value and consumption, with the main variation being in the style of reporting, whether that be intended for the board, or their investors.


About Red Deer:

Red Deer is a financial technology company dedicated to enhancing the performance of active investment managers. Serving a client base of some of the world’s leading hedge funds, asset managers and wealth management firms, Red Deer is founded on three key pillars – ‘Miss Nothing that Matters’, ‘Turn Data into Decisions’ and ‘Stay Ahead of Regulation’. Red Deer enables active investment managers to intuitively explore and discover, share and collaborate and make data-driven decisions that drive performance, whilst seamlessly staying on the right side of regulation.

Discover the technology that has the power to change your investment world. Visit www.reddeer.com

related content:

Market Research as a Source of Insight for Hedge Funds

Organising Research & Staff Development in Equity Hedge – A Podcast with Stuart Mitchell

Hedge Funds’ Access to Investment Research Under Change

10 Ways Hedge Fund Managers Can Improve Their Research Using The Web