Rising appetite for risk-as-a-service
FIS: Best Risk Management Technology Provider – The essence of the FIS Front Arena solution centres on providing portfolio managers with dashboards that deliver a real time view of positions, risk and performance. Adrian Holt, Director at FIS, identifies that the strength of the solution is the broad range of investment strategies the platform can support: “This coverage is enabled by the vast range of asset classes and associated valuation models which are natively built into the application. Through these models, users have access to a very broad range of analytics and metrics. These are augmented through the integration of other FIS modules such as Monis and APT.”
The platform is more than a risk solution and provides full front-to-back office capabilities, including OMS and post-trade operational workflows. Holt comments “The deep integration of risk analytics and metrics into the solution come into their own when we consider the order generation workflow. Portfolio managers can use many of these risk metrics to size orders and generate candidate trade programmes which can then be processed through the integrated OMS. This is a unique aspect of the platform.”
Hedge fund managers are facing a few key challenges, namely growing assets and delivering profit in a crowded market. “Investors hold the whip hand and can dictate terms on fees, control over their allocation, reporting and transparency. So, managers have to rise above their competition,” notes Holt, “We can help clients by enabling their growth through our ability to support their need to diversify into new strategies. We can do this while driving down cost and operational complexity through the delivery of outsourced services.”
The outlook for the hedge fund market however looks very positive. Holt identifies the desire for investors to allocate to funds which offer true diversification in a world where conventional strategies (60 per cent equity, 40 per cent bonds) are failing as a driver of growth for the market. There is also demand for opportunistic strategies which can benefit from the dislocation in credit markets due to the effects of the pandemic. “These trends will support the growth of our solutions and services which are well suited to complex or multi-strategy investment styles,” Holt remarks.
The growth FIS has experienced in the past year has also been driven by the firm’s response to clients’ changing needs. One of the primary areas of focus has been the desire for more integrated front to back office solutions. To meet this need, FIS has continued strengthening its offering in this space with significant investments in its OMS, PMS and risk management platform Front Arena, as well as the operational interface and workflows. Clients also appreciate the open architecture of the platform and the ability to extend its functionality and integrate 3rd party models and solutions.
Holt also outlines the increased appetite for outsourced and co-sourced services which includes risk-as-a-service: “Our firm offers a broad range of services across the middle and back office to meet this demand. Risk reporting and management can be particularly complex and clients are looking to outsource as much of the heavy lifting around these processes as they can. This has driven our investment in our risk-as-a-service offering.
“As part of this service we are also providing clients with access to more data to support risk and valuations. This includes high quality data originated within our organisation including credit, volatility and commodity data.”
Strategy Director, Cross Asset Trading and Risk, FIS
Adrian Holt is responsible for the buy side strategy for the FIS’ Cross Asset Trading and Risk (CATR) group within FIS’ Capital Markets business. As well as product management for CATR’s hedge fund offering. Adrian ensures that our products and services are evolving to address the changing needs of our buy-side clients.