Funds Europe talks to Ralph Benchetrit and Romain Sauvage about the development of Open Asset Management Language and the need for data standards.
The asset management industry is becoming increasingly data-driven, much like many other industries. One implication of this trend is that it has highlighted the importance of data management and the difficulties associated with unstandardised data.
The biggest of these problems is the exchange of data both within internal departments and with third parties. In fact, Amundi exchanges thousands of files with 70 custodians and more than 250 counterparties each month.
It was these challenges that led Amundi to explore the feasibility of developing its own standardised data language which after a long period of internal use is now being offered to external entities.
“We have seen data standards in financial industry, like Swift for settlement and FIX messages for orders execution,” says Romain Sauvage, head of product and marketing, Amundi Services. “But we have not seen standards covering the entire asset management value chain.
“We have a lot of third parties – fund administrators, custodians and best-of-breed partners, as well as asset management clients that use our outsourcing offering Amundi Services for portfolio management system ALTO*, Middle-Office and dealing services. So it made sense to develop a common language for the all the various data types – fund data, portfolio data, risk data and so on.”
Open Asset Management Language is essentially a data dictionary that models the main business objects in the asset management world, for the portfolio inventory or the asset associated with the positions (securities, OTC or index).
The standard also covers a range of data from across the lifecycle – the instruction in the front office to the risk and compliance data, the reconciliation in the middle office to the performance and reporting.
The objective is to use this dictionary to ensure standardised messages and reference data and to minimise any operational risk or inefficiency when that data is exchanged either internally or with third parties.
“The main difficulty with data today is when it is exchanged,” says Ralph Benchetrit, Head of Enterprise Architecture. “Every time we integrate analytics from external partners, we have to define the data that will be used and how it will be exchanged. This can quickly become costly and time-consuming when you have to do this for each and every client.”
The Open Asset Management project was a perfect example of business working with IT, says Sauvage. “We first started to use it internally with all of our business lines to define the terms of each business object, such as an asset swap for example. It is more about the definition than the implementation. We started with data management and the need to model portfolios and financial instruments first. Then we followed that with risk management, which is more complex because different risk factors emerge every day.”
“Every team has their own idea of how to define a business object but the data needs to be shared and reused by everyone. So it is a real partnership between IT and operations and all the different business lines – portfolio managers, risk managers, data managers and front office dealers,” says Benchetrit.
The standard also provides versions for different formats such as XML, JSON, CSV, Typescript and Java Library while work to make it available for other formats and coding languages such as Python is ongoing.
It is also fully integrated with Amundi’s portfolio management system ALTO*, which is offered to external asset managers and institutional investors. “We get a lot of data from fund administrators and custodians as well as asset managers that use our Amundi Services platform,” says Sauvage. “So the same way we have a data standard for internal use, we also want one for external use. Instead of working separately with our clients, we work with them to use Open Asset Management Language.”
Developing a data standard for internal efficiency is one thing but to then look to have this same standard adopted across the industry is an ambition rarely seen in the asset management industry.
Pushing the use of the standard externally and ensuring adoption among potential competitors is a challenge that Benchetrit recognises. “We have to work together to use something other than a proprietary language. As Amundi, we would like to share this standard language with custodians as well as the asset managers connecting to us via APIs. At the moment we have to use some data that is unstandardised.”
“We launched the project externally in October, so we are awaiting feedback from peers,” says Benchetrit. Two French asset managers have expressed an interest in working with Amundi to develop the standard further and we will work together in 2020. “We are an asset manager so we know the industry’s challenges and what data is required. And we all face the same problems when it comes to data.”
Sauvage is confident that with more than 650 IT developers, Amundi has enough resources to cope should adoption of the standard become widespread. He also says that Amundi is willing to see the project become an independent initiative if it means greater adoption. “That is why we called it open. It is a good thing if other asset managers get involved,” he says.
To this end, Amundi has made the standard available for free, via a licence, and also enabled asset managers to use it and propose modifications. “If we want it to be a standard, we have to offer it for free,” says Benchetrit.
The other important principle is simplicity, says Benchetrit. “Some of the banking standards are very complex and hard for smaller organisations to implement – it is one of the reasons that standards have failed to gain widespread adoption in the past. With Open Asset Management Language, it is easy to use, easy to understand and to implement.”
Focus on ALTO Portfolio Management Systems
ALTO* is Amundi’s Portfolio Management System (PMS) covering the entire Asset Management value chain and providing a 360° portfolio view for all asset classes. ALTO* users can, for example, analyse and manage portfolios, simulate the impact of orders, make investment decisions, perform middle office operations, measure performance, monitor exposures and risks.
*ALTO: Amundi Leading Technologies & Operations
Disclaimer: The information contained in this document is deemed accurate as at 30 November 2019. Data, opinions and estimates may be changed without notice. Document issued by Amundi Asset Management, a French “société par actions simplifiée”- SAS with capital of 1 086 262 605 euros – Portfolio Management Company approved by the AMF under number GP 04000036 — Registered office: 90 boulevard Pasteur — 75015 Paris — France — 437 574 452 RCS Paris – www.amundi.com
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