Macquarie Bank's funds management arm has consolidated its investment management operations as part of its expansion plans in the Asia-Pacific region.
The bank has upgraded its existing HiPortfolio solution -- an investment management platform by financial software firm DST International -- to administer its wholesale investment business (high net-worth clients) in Australia, and also support overseas business growth in Hong Kong and the UK.
Roger Cartwright, Macquarie Bank Australia's head of portfolio services and divisional director, said the upgrade -- to DST's HiPortfolio/2 solution -- enables integration of institutional back and middle office functions, including investment confirmation, settlement, income and corporate actions, custody, cash management, stock lending and unit pricing, and minimising human intervention in such processes.
The bank has adopted a new module within HiPortfolio/2. Those modules are advanced technologies such as a multi-currency capability to handle the euro and other international currencies, and a straight-through processing facility allowing for same-day processing of trades.
Cartwright said the upgrade was also a cost-effective way of expanding Macquarie's wholesale fund management business overseas without the need to have stand-alone operations, and to do this in a consolidated way from its Australian base.
"Operationally, the solution is economical for us in that we didn't need to add more portfolio managers in Hong Kong or the UK; it kept headcount down with only a 3 per cent increase in the new offices," he said.
The productivity gain through setting up new operations to expand its 300-strong wholesale investment portfolio is in the ability to treat the new offices as "another portfolio" said Cartwright, adding: "The focus is on the client side as opposed to administration and back-office work."
"Whatever growth we achieve -- whether that's through five, 10, 20 or 30 more portfolios -- we're confident that HiPortfolio/2 will support that growth and more in the future," Cartwright said.
Also a key driver for the project was the solution's compliance with risk management requirements for investment funds management -- and with regulatory and reporting requirements in key markets like Hong Kong, London and Canada. Those reporting requirements relate to taxation structures for Capital Gains and Goods and Services taxes.
Cartwright added: "The Australian market is our core base for the funds management business. And HiPortfolio has a distinct competitive advantage locally, in terms of its interfaces with CHESS [Clearing House Electronic Sub Register System], the Australian Tax Office and AustraClear (the clearing house for discount securities), so internationally that gives us an Australian edge. Whereas in places like the UK, financial institutions don't have a UK-specific system which supports the functionality of their [investment] assets, and that's a hindrance to them."
The upgrade required a multimillion investment by Macquarie, according to a spokesperson for DST International. Cartwright said the bank expects a relatively "short" payback period on that investment.