A number of forces are injecting new complexities into capital markets. Growing investor demand for access to private markets, the search for diversification and differentiation in a crowded world of low-cost passive ETFs, and evolving consumer preferences toward ESG-sensitive portfolios are just three of many factors shaping the investment management industry.
We regularly hear from investment firms that these forces are leading many of them to consider wholesale changes to their operating models. They are under increasing pressure to reduce costs, entertain mergers to achieve scale, and deliver new investment products to their institutional and retail customers. Against that backdrop, many firms still depend on technology acquired over decades, supplemented with heavy reliance on spreadsheets and manual processes.
In many ways, Charles River anticipated these challenges long ago by designing an open architecture platform. What do we mean by that? I look at it as a set of core capabilities across the investment process that integrate easily with third-party solutions to help customers address the requirements of their product and asset class mix. It’s a lot like how the smart phone upended cellular communication by offering an improved user experience powered by an app store of external providers.
Platforms democratize access to a growing ecosystem of risk, liquidity, application, data and regulatory reporting providers. This has transformed the art of the possible for our customers. It also enables our product and engineering teams to focus on what they’re best at: building out core front and middle office capabilities and improving extensibility and connectivity for our partners with public APIs, web services and FIX/SWIFT access.
Our platform and partner ecosystem help support the rapidly evolving needs of investment and wealth managers in ways that can be difficult, if not impossible, for traditional, closed technology offerings to replicate:
- Traders, portfolio managers and analysts increasingly demand choice. Even moderately sized firms use multiple data providers, externally sourced risk models, algos from various brokers, and transaction cost analysis from different vendors.
- Fragmentation in global markets forces investment firms to source liquidity from multiple trading venues. By streamlining the process of establishing and certifying FIX connectivity with new liquidity providers, we enable asset managers to access the venues best aligned with their asset and product mix for the geographies they trade in.
- A new class of no-code desktop interoperability tools help expedite integration and deployment of external applications, enabling firms to tailor their trading, risk and portfolio construction workflows with minimal IT support or complex integrations.
This brings me back to the trends impacting our customers today: enabling access to private markets, launching differentiated investment products, and incorporating ESG analytics into investment strategies. Our recent acquisition of Mercatus and partnerships with Qontigo, MSCI, RIMES and Snowflake are a few examples of how we can help investment firms keep pace with growing complexity through our partner ecosystem, supported by an open platform that streamlines third-party integrations.
Looking ahead, we believe that investment firms using open platforms will have a significant competitive advantage, with the flexibility to access their preferred external providers across their investment process, the agility to respond to changing investor preferences and regulatory demands, and the scalability to support both organic and inorganic growth.
All Insights
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