According to the good people at Forbes Bridgewater Associates, one of the largest hedge funds in
the world with $120 billion in assets, will soon use Northern Trust to shadow
the fund administration work it outsourced to BNY Mellon in 2011.
For asset managers, outsourcing middle and back office work
to custodians is nothing new; it has been going on for years as the big
custodians like JPMorgan, Citi, BNY Mellon, Brown Brothers Harriman and
Northern Trust use their skills, plus massive deployments of technology, in the
high-volume, low-margin business of fund administration.
The first big fund to outsource was PIMCO back around 2000,
said Pete Cherecwich, head of global fund services business unit at Northern
Trust. As in-house systems age, funds facing the decision to invest in new
technology have often decided to to outsource instead. The big custodians can
provide depth of expertise, the latest technology, a large staff of technology
experts and career paths for technologists that they wouldn’t find in a bank.
For hedge funds, using outside administrators is a
relatively recent development. Historically
a lot of hedge funds did their own fund administration, said Cherecwich. Spurred by the Madoff scandal, many
institutional investors began to insist on third party fund administration.
Citadel, the Chicago-based hedge fund, sold its sophisticated fund management
system, Omnium, to Northern Trust in 2011 and became a client….
Wait...wait...there's more at http://www.forbes.com/sites/tomgroenfeldt/2013/01/28/major-hedge-fund-will-run-two-sets-of-book/
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