Investment managers that offer separately managed accounts to institutional investors, family offices and other high-net-worth investors typically have established their own middle-office operations, as their custodian bank's infrastructure usually did not fully support all the requirements of such accounts.
These in-house operations, many of which were created 10-plus years ago, are still in place today using legacy technologies and processes that are simply not keeping up with the current demands placed on managers. For example, many of the investment accounting systems in use are more than 15 years old with limited multicurrency capabilities and do not support the wide range of asset classes required by today's complex investment strategies. But perhaps the most significant deficiency in many of the in-house operations is the lack of a data management system.
While many the large managers have adopted robust data governance programs requiring significant investment in data warehouses, small and midsize managers continue to rely on their legacy accounting system as their de-facto data warehouse. This will make it very challenging for those managers to comply with the pending regulatory changes as so many of these regulations are heavily dependent on rich investment and time series data.