Research reports suggest buyside will wait for technology and service offerings to improve before spending the money to improve the processing of OTC products. But can money managers afford to wait?
Services providers and vendors may be sad to hear the buyside is taking a ‘wait and see’ approach to derivatives processing. As volumes of these more complex, OTC products grow so does a firm’s need to find efficient methods of processing them. However, most traditional money managers and hedge funds are reluctant to invest in technology or outsourcing some of the processing to service providers.
Why wait? Well, there are numerous reasons why money managers are ‘sitting tight.’ Some players lack the volumes of OTC products to justify the expenditure on new technology and others simply want the sellside to solve the problem.
But if a money manager is processing OTC derivatives manually now it is undoubtedly incurring additional risk (market and operational) as well as operational costs (hiring more ops staff).
Can the buyside really afford to wait?
