Fixed Income Front Office System – Vendor Selection

Background:

Reformis were asked to provide project management and business analysis resources to a large international asset management company for their fixed income, front-office systems, vendor selection process.

A need for replacement fixed income front office systems was determined following a strategic business review, which recognised changing market dynamics and industry trends and set out to define key strategic goals and business objectives over the medium to long-term.

One of the key conclusions was that the business would look to extend its product range, focusing on high alpha generating products, moving away from traditional long-only and balanced mandates. More complex investment techniques, including the use of derivative instruments would be applied to achieve the returns required. The business was aggressively pursuing this strategy, demonstrated by the purchase of a fixed income focused hedge fund manager.

Reformis Solution

The scope of the selection was for a system to support the order flow from portfolio management, decision support and order generation to the delivery of a completed trade to the middle / back office systems for post-trade processing.

The selection process started with a Request for Information (RFI), which reduced an initial list of 5 vendors to a shortlist of 2 – thinkFolio and Aladdin from BlackRock Solutions (BRS). The RFI evaluation was determined by a written RFI response and presentation to business and IT stakeholders.

The RFI was followed by an interim high-level evaluation of the operating model fit of the shortlisted vendor offerings and a cost benefit analysis. BRS Aladdin provided different options to the business in terms of operating model coverage; therefore the evaluation had to take into account impact upon business functions supporting the front office, such as risk, performance and compliance.

Following the interim evaluation, a full Request for Proposal (RFP) was undertaken to inform the final vendor selection. Requirements were gathered from the fixed income fund managers, dealing desk, treasury and supporting business functions – risk, performance and compliance. Additional technical and commercial requirements were collated and added to the RFP documentation. Scenarios were also devised that the vendors were to demonstrate in workshops as part of the selection process.

To complete the process, the RFP responses and scenario demonstrations were scored and the evaluation findings and recommendations passed to senior management for confirmation of the selection.

Reformis were instrumental in managing the vendor selection process and collating the requirements across business and IT. The importance of the project and the potentially large amounts of investment resulting from it, meant that the project enjoyed a high profile throughout the organisation and benefited from input by many heads of department. Reformis ensured that the project retained its focus of delivering a clear and transparent evaluation and recommendation to the fixed income front office.

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