State Street CEO sees custody 'arms race'
Skip to main content
pilogo-NEW
Subscribe
  • Subscribe
  • My Account
  • login
  • NEWS
    • Asset owners and the coronavirus
    • Alternatives
    • Consultants
    • Coronavirus
    • Defined Contribution
    • ESG
    • Frontlines
    • Hedge Funds
    • Investing / Portfolio Strategies
    • Money Management
    • Pension Funds
    • People Moves
    • Private Equity
    • Real Estate
    • Searches & Hires News
    • SECURE Act
    • Special Reports
    • WorldPensionSummit
    • Ron Schmitz
      Pandemic drives faster transition for Virginia to private markets
      Mubadala Investment Co. logo
      Mubadala draws on portfolio in coronavirus fight
      T.J. Carlson
      Texas Muni reduces downside risk during pandemic, finding opportunities now
      Scott Davis
      ‘Triage plan’ at Indiana system helped stem losses
    • Some alternative strategies struggle in first quarter following tough 2020
      Close up of Business people shaking hands, finishing up meeting, business etiquette, congratulation, merger and acquisition concept
      Cathay Innovation Partners takes minority stake in Seaya Ventures
      IACPM: Credit managers see stabilizing effect from stimulus programs
      KKR lifts out 3 to focus on clean energy infrastructure
    • Hub International continues buying spree with IBG acquisition
      Callan brings on 2 executives
      Hub International agrees to buy Plan Sponsor Consultants
      Aon names public markets solution leader
    • The J.P. Morgan Chase logo displayed at a branch bank
      J.P. Morgan sells $13 billion of bonds in largest-ever bank deal
      John Bakarat
      Commentary: COVID-19 and real estate debt – where investors should be looking
      IACPM: Credit managers see stabilizing effect from stimulus programs
      BofA: Most managers bullish on economy, markets
    • Pentegra launches pooled employer plan
      Teresa Hassara
      Ascensus taps MassMutual alum as new FuturePlan president
      Economic Group Pension Services scoops up third-party administrator
      OregonSaves gathers $100 million in assets
    • WTW to cut carbon footprint of OCIO portfolios by half by 2030
      SEC Commissioners Testify Before The House Financial Services Committee
      SEC shouldn’t require ESG metrics – commissioner
      Tracker gives investors insight into progress on social commitments
      Shoppers wear protective masks while visiting an Apple Inc. store at George Street in Sydney, Australia, on June 24, 2020.
      Apple backs SEC mandate on climate disclosure
    • Fearless Girl
      SSGA’s Fearless Girl statue now shattering glass ceiling
      Tangen video
      Norges chief dons chef’s hat to boost employees’ spirits
      Ken Griffin
      Ken Griffin donates $5 million to give Miami students internet
      New book culls institutional wisdom from podcast series
    • Karen Karniol-Tambour
      Bridgewater appoints 2 co-CIOs to oversee new sustainable investing group
      Hedge funds post best first-quarter return since 2000
      Jason Kephart
      Managers see good times ahead in 2021
      Jev Mehmet, CEO of Brevan Howard's Coremont unit
      Brevan Howard runs $50 billion unit like BlackRock’s Aladdin
    • University of New Hampshire endowment allocates $14 million
      Sen. Elizabeth Warren, D-Mass., listens during a Senate Health, Education, Labor, and Pensions confirmation hearing for Marty Walsh, secretary of labor nominee for President Joe Biden, in Washington on Feb. 4, 2021
      Lawmakers reintroduce climate-risk disclosure bill
      The U.S. Capitol and Library of Congress stand in this aerial photograph taken above Washington
      Senate bill seeks to make U.S. climate-change leader
      Brexit pushes 440 financial services firms to move some U.K. business to Europe
    • Morgan Stanley logo
      Morgan Stanley’s record quarter stained by Archegos collapse
      Man Group CEO Luke Ellis
      Man Group AUM up in first quarter on performance
      Michael Zerda
      LaSalle picks head of debt and special situations
      Susan Ford
      Duff & Phelps brings on institutional business development managing director
    • Corporate plan funding gets a boost from higher discount rates – Milliman
      Evan Siddall
      AIMCo lines up next CEO
      A bank customer takes Danish Kroner banknotes from an ATM in Aarhus, Denmark
      Denmark’s PFA Pension achieves 6.3% return in first quarter
      Ontario Municipal promotes from within for new global equities exec
    • Tufts taps interim co-CIO as new investment chief
      Michael Zerda
      LaSalle picks head of debt and special situations
      Evan Siddall
      AIMCo lines up next CEO
      Susan Ford
      Duff & Phelps brings on institutional business development managing director
    • Paul Morrissey
      Blackstone Growth picks managing director to lead European investing
      Bills of euro, dollar and pound currencies, among others
      Ardian closes latest buyout fund at $8.8 billion
      Hand typing on stationary iPhone at an office reception desk
      Private equity’s taste for tech spurs $80 billion deal spree
      Vista Equity promotes 2 to leadership roles on 2 funds
    • CalSTRS indutrial property
      Investors hungry for industrial properties
      Tim Wang
      GLP names co-president of logistics, industrial real estate for China
      Frank Forster
      StepStone Real Estate adds managing director for Europe
      Christine Iacoucci
      BentallGreenOak promotes from within to fill Canadian CIO role
    • Andy Schreiner
      New PEPs targeting firms without retirement plans
      Jackie Walorski
      Contribution catch-up for caregivers gaining favor
      Retirement cartoon
      Hopes rising for retirement readiness in 2021
      Neal and Brady
      Retirement security could be only issue both sides accept
    • Corporate pension contributions
      Eddy Awards 2021
      COVID-19: One year in
      Charging Bull, sometimes referred to as the Wall Street Bull or the Bowling Green Bull, a bronze sculpture that stands on Broadway just north of Bowling Green in the Financial District of New York City
      Top-performing managers Q4 2020
    • U.S. still a key market for investors
      Collected coverage of P&I's 2020 WorldPensionSummit
      Pedestrians pass a large advertisement on the Arndale Center shopping mall reading 'Act now to avoid a local lockdown' in Manchester, England
      COVID-19 puts new opportunities and risks on the agenda - WPS panelists
      Screens display stock price information over the trading floor of the NYSE Euronext exchange in Paris
      Private assets will continue to grow in portfolios – WPS panelists
  • Data
    • Research Center
    • Searches & Hires Database
    • Searches & Hires News
    • RFPs
    • Charts / Infographics
    • Sponsored Research
    • Trackers
    • Q2 2020 searches and hires overview report
      Q2 2020 money manager M&A activity summary
      Q2 2020 legal overview report
      Q1 2020 searches and hires overview report
    • University of New Hampshire endowment allocates $14 million
      Memphis Light, Gas & Water scouting for special situations funds
      Washington State Investment Board earmarks $4.2 billion for 7 funds
      Virginia earmarks $1 billion for 4 managers
    • University of New Hampshire endowment allocates $14 million
      Memphis Light, Gas & Water scouting for special situations funds
      Washington State Investment Board earmarks $4.2 billion for 7 funds
      Virginia earmarks $1 billion for 4 managers
    • Passive Investment Management Services
      Active Extended Global Credit Manager Search
      Actuarial Services
      Investment Management Services
    • Private real estate funds continue rebound
      Managed account adoption stalls in 2020
      U.S. bonds have worst quarterly return since 1981
      Stable value retains edge over money market funds
    • Institutional Investors: Shared Expectations, Divergent Paths
      Global Investor Study 2016
      Workplace Financial Wellness
    • U.S. Endowment Returns Tracker
      Pension Fund Returns Tracker
      Earnings Tracker
      Corporate Pension Contribution Tracker
  • Insights
    • Opinion
    • White Papers
    • Industry Voices
    • Letters to the Editor
    • Partner Content
    • Publisher's Update
    • CalPERS cartoon
      Urgency underscores CalPERS' search for a CIO
      Multiemployer plans cartoon
      Money — but no fixes — for multiemployer plans
      Vaccination cartoon
      Rallying to meet the ongoing COVID-19 challenge
      Tesla cartoon
      Don’t confuse wealth creation with retirement saving
    • Bipsync Client Stories: RMS in Action at Pensions and Superannuation Funds
      COVID-19 Makes LP Portfolio Management More Important Than Ever
      China: the outlook is bright for longer-term investors
      Finding Differentiation in Securitized Assets
    • John Bakarat
      Commentary: COVID-19 and real estate debt – where investors should be looking
      Jake Remley
      Commentary: Inflation expectations vs. reality in the bond market
      Greg Shea and Steven Kindred
      Commentary: The solution for yield-seeking allocators may be hiding in plain sight
      Jim Park
      Commentary: Asian Americans, Pacific Islanders face ‘bamboo ceiling’ in money management
    • Writer using a typewriter
      OCIO industry needs to adopt GIPS
      Writer or journalist workplace. stock illustration
      Even as it assails China, Trump administration emulates it
      Skeptical of Main Street support for proxy adviser proposal
      Focus on manager diversity pushes asset owners’ to walk the talk
    • P&I Content Solutions
      Research for Institutional Money Management
      P&I Content Solutions
      Top questions for institutional investors
      Sponsored Content By Newton Investment Management
      Growth and Innovation in Emerging Markets
      P&I Content Solutions
      Fixed income 2021
    • Help us help you by supporting quality journalism
      You Must Believe in Spring
      Everything Must Change
      Tomatoes & Investments
  • Multimedia
    • Videos
    • Webinars
    • Polls
    • Slideshows
    • Charts / Infographics
    • watch video
      1:23
      The passive fixed-income glut
      watch video
      1:38
      Is it time for DC plans to embrace private equity?
      watch video
      5:39
      The coronavirus pandemic: One year later
      watch video
      0:45
      Private funds weathered 2020 turmoil
    • New Outlook on Income: A Framework for Evaluating DC Retirement Income Solutions
      Understanding the PEP Evolution
      Divest or engage?
      Innovations in DC: Helping supercharge retirement outcomes
    • POLL: The Biden infrastructure plan
      POLL: Retirement income solutions
      POLL: Working after the pandemic
      POLL: The year ahead for the 1,000 largest U.S. retirement funds
    • view gallery
      9 photos
      Coronavirus and the markets
      view gallery
      22 photos
      The 1,000 largest retirement funds: 2020
      view gallery
      10 photos
      Outlook 2020
      view gallery
      10 photos
      2019 as seen through the eyes of Roger
    • Private real estate funds continue rebound
      Managed account adoption stalls in 2020
  • Events
    • Conferences
    • Webinars
    • DC Investment Lineup Virtual Series
      ESG Investing Virtual Series
      Private Markets Virtual Series
    • New Outlook on Income: A Framework for Evaluating DC Retirement Income Solutions
      Understanding the PEP Evolution
      Divest or engage?
      Innovations in DC: Helping supercharge retirement outcomes
  • Careers
  • Research Center
MENU
Breadcrumb
  1. Home
  2. MONEY MANAGEMENT
April 17, 2017 01:00 AM

State Street CEO sees custody 'arms race'

Winners will be firms that best parse data, Hooley says

Douglas Appell
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Brian Snyder/Reuters
    Joseph L. 'Jay' Hooley had high praise for State Street's Beacon program, a data integration project.

    Global custody firms are engaged in a data analytics “arms race,” with the battle likely to favor those that can give clients an edge in managing their investment portfolios, says Joseph L. “Jay” Hooley, chairman and CEO of Boston-based State Street Corp.

    Success will go to “those that can extract insights on a real-time basis” from the trillions of dollars of assets they oversee globally, “to help inform client judgments about investment management, risk management and compliance,” Mr. Hooley said in a March 30 interview in Singapore.

    The 30-year industry veteran said the decadeslong morphing of global custody from a transactional business to a data and analytics business has effectively “redefined the audience we're talking to: it used to be back office to back office, and now it's back office to front office, as the information inherent to what we do becomes more interesting to portfolio managers and risk managers.”

    It's “redefining where the value is created in the value chain,” he added.

    For industry heavyweights such as State Street and Bank of New York Mellon Investment Services, which oversee more than $29 trillion apiece in global custody assets, a precondition to making the most of that opportunity is gaining digital access to all data on the assets they oversee.

    State Street's “Beacon” program — a 10-year, billion-dollar effort, more than half complete this year, to digitally interconnect all of the company's systems — will allow all of the company's global client data to be taken in digitally, pass “all the way through our system ... without human touch,” and create real-time data on the other side, said Mr. Hooley.

    Francis J.G. Braeckevelt, a Singapore-based managing director and chief operating officer with BNY Mellon Investment Services, in a separate interview, said his globe-spanning firm has likewise made “great strides” in digitalizing everything it does, laying the foundation for designing and offering more powerful data analytics tools to meet client needs.

    Every big custody player has figured out that “this is where the puck is going,” said Mr. Hooley.

    The only question now is “who can execute,” helping clients sift through an avalanche of data to glean real-time insights that can guide their investment and risk management decisions, he said.

    “Once you achieve that state” of seamless digitalization, “then for the information we hold on behalf of our clients, we're giving them real time data inputs ... overlaid by different analytic models — some of which we hope to provide — which will inform the future of investment management and, frankly, the business,” predicted Mr. Hooley.

    It will be the “solutions you build on the back of that” digitalization that “differentiate you from the rest,” agreed Mr. Braeckevelt.

    The BNY Mellon veteran pointed to the “Liquidity Plus” dashboard his firm began offering clients a few years back as one recent solution to meet the needs of clients, many of whom faced challenges during the global financial crisis in ensuring they had sufficient liquidity at “the right time, at the right place.” The product gives clients the ability to monitor and analyze their liquidity positions, allowing them to make shifts where needed in a cost-effective way, he said.

    Developing a new app

    Mr. Hooley cited an app for risk managers called Pharos — under development at State Street since 2016 - as an example of the company's continuing efforts to help investors better digest the deluge of data overwhelming them now.

    The app connects news at a global level to a client's portfolio holdings. In a hypothetical example, Mr. Hooley said news of an explosion at a big South African copper mine would prompt an alert on the phone of a chief risk officer with concentrated holdings of Apple stock, due to the heavy copper content of iPhones.

    As another recent example, Kevin Wong, senior managing director and head of sector solutions, for State Street's global markets and global services business in the Asia-Pacific region, pointed to a six-year collaboration between State Street and Cambridge, Mass.-based PriceStats — nicknamed the “billion price project” — to track online global price data retail goods, which can yield consumer price inflation data a month or more ahead of official CPI announcements.

    “We've been rolling that project out,” garnering interest from clients especially sensitive to inflation movements, including fixed-income managers and a number of central banks, said Mr. Wong.

    Other examples Mr. Hooley cited of State Street leveraging its back office muscle to create investment products include: a private equity beta vehicle and the firm's SHE exchange-traded fund, based on an index of U.S. large-cap companies ranked among the highest in their sector in terms of gender diversity within senior leadership positions — both introduced last year.

    Making data available

    As “the largest provider of services to the private equity world,” State Street “went out to clients that we serve in the back office and said would you be willing to make your data available in order for us to create a PE benchmark,” and they agreed, said Mr. Hooley. Based on the resulting PE benchmark, State Street launched an investment vehicle offering synthetic exposure to PE beta returns, which will let asset owners looking to ramp up allocations to that asset class in coming years capture a portion of those returns as they go about the time consuming process of picking specific PE managers, he said.

    He pointed to State Street's SHE ETF, meanwhile, as part of a broader opportunity for the firm to use its prowess in data analytics to bring out products in the growing environmental, social and governance space. State Street was able to confirm a positive correlation between firms that had good gender diversity characteristics among senior leadership and investment returns to create an investment product “that represents a theme” of growing interest now, he said.

    To better focus on that data analytics imperative — which Mr. Hooley termed “the next growth engine of this business” — State Street launched its Global Exchange division three years ago, the company's fourth division following its Global Service trust and custody business, its Global Markets foreign exchange and securities lending operations and its Global Advisors money management arm.

    While the new division accounts for well under 10% of State Street's revenues at present, those revenues are “coming up very, very quickly,” said Mr. Wong.

    State Street Global Advisors - even after acquiring $100 billion in actively managed assets last year through its acquisition of GE Asset Management- remains best known for managing more than $2 trillion in index strategies and passively managed exchange-traded funds, but State Street's asset servicing business, which accounts for more than 85% of the holding company's revenues, is focusing more and more on providing tools to help asset owners and money managers actively manage their portfolios.

    Whether the client is a pension fund or a sovereign wealth fund or an insurance company, “what makes you successful is the ability to generate attractive returns,” and increasingly that will be determined by who has access to the better data needed to effectively create a new level of “information advantage,” said Mr. Hooley.

    Some of State Street Global Exchange's offerings, meanwhile, have been embraced in the Asia-Pacific region, with the division's revenue growth there exceeding the strong growth seen in North America and Europe, said Marko Milek, State Street's Hong Kong-based head of global exchange for the Asia-Pacific region, in a separate interview.

    Related Articles
    Robo-advisers aren't taking over ... yet
    AI going to head of the class
    Machine learning will transform investment management
    Research could be next for trading floor
    AI? It's not sci-fi anymore
    State Street hires 2 for institutional investor custody business
    Recommended for You
    Morgan Stanley’s record quarter stained by Archegos collapse
    Morgan Stanley’s record quarter stained by Archegos collapse
    Man Group AUM up in first quarter on performance
    Man Group AUM up in first quarter on performance
    LaSalle picks head of debt and special situations
    LaSalle picks head of debt and special situations
    Research for Institutional Money Management
    Sponsored Content: Research for Institutional Money Management
    sponsored
    Events
     
     
    Sponsored
    White Papers
    Bipsync Client Stories: RMS in Action at Pensions and Superannuation Funds
    COVID-19 Makes LP Portfolio Management More Important Than Ever
    China: the outlook is bright for longer-term investors
    Finding Differentiation in Securitized Assets
    Green and sustainable bonds in emerging markets
    Portfolio Protection: One Size Fits None
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    April 5, 2021 Page One

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    pilogo-NEW
    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    150 N. Michigan Ave.
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • NEWS
      • Asset owners and the coronavirus
      • Alternatives
      • Consultants
      • Coronavirus
      • Defined Contribution
      • ESG
      • Frontlines
      • Hedge Funds
      • Investing / Portfolio Strategies
      • Money Management
      • Pension Funds
      • People Moves
      • Private Equity
      • Real Estate
      • Searches & Hires News
      • SECURE Act
      • Special Reports
      • WorldPensionSummit
    • Data
      • Research Center
      • Searches & Hires Database
      • Searches & Hires News
      • RFPs
      • Charts / Infographics
      • Sponsored Research
      • Trackers
    • Insights
      • Opinion
      • White Papers
      • Industry Voices
      • Letters to the Editor
      • Partner Content
      • Publisher's Update
    • Multimedia
      • Videos
      • Webinars
      • Polls
      • Slideshows
      • Charts / Infographics
    • Events
      • Conferences
      • Webinars
    • Careers
    • Research Center