6 February 2006
“60% of Asian Investment Managers have reduced or suspended business with brokers because of poor Operational Performance in the last 12 months”, reports a new survey by Z/Yen, the London-based market intelligence firm. “Investment Managers are becoming increasingly demanding at levels of confirmation and settlement performance and half of them regularly carry out ranking of brokers’ Operational Performance.”
Excellent Operational Performance is also rewarded and is now a significant factor in the “Broker Vote” (the process by which Asset managers allocate business to Brokers):
Over 80% of Investment Managers now say that Operations has an influence in business allocation for Equities, particularly for Program Trades (55% for Fixed Income).
Operational Performance comprises up to 25% (average 15%) of the “Broker Vote”.
It is also clear that as demands grow from the Investment Management community that the Brokers are responding with better levels of service and more focused customer offerings:
In 2005, Morgan Stanley were ranked best 2005 Operations Bank for Equities with the highest overall score for transaction processing and client service, Credit Suisse were second;
Credit Suisse were voted best 2005 Operations Bank for Fixed Income with Merrill Lynch in second place.
Additionally, Investment Managers are starting to invest more in technology with 40% now using or planning to use OASYS or CTM.
Lee Porter, Director for Asia Pacific Operations at Credit Suisse said, “"We are pleased to be recognised by our clients. These results reflect the great strides that we have made across both Fixed Income and Equity products in the region, mirroring the success we have had in Z/Yen's European poll. We continuously look for ways to further improve our performance for both core and value-added services. Surveys, such as the one compiled by Z/Yen, are a vital channel for gaining feedback in an independent and impartial manner."
Jeremy Smith, Director of Financial Services at Z/Yen, said, “As in Europe and the US, Asian Investment Managers are very aware of operational service level deficiencies from the Brokers and are increasingly channelling business to those who provide high levels of STP and value-added services. Tolerance of poor performance has disappeared.”
Z/Yen surveyed 36 leading Asian Investment Managers during October and November 2005. The survey was commissioned by 8 leading Brokers, to help prioritise their customer service needs and to independently assess the views of their Clients.
A summary of results of this study (Operational Performance of Brokers – Asia Securities 2005) is available at: http://www.zyen.com/Services/finance.htm.