DST Global Solutions is used to helping their investment management clients solve complex correlation analysis, portfolio performance measurement and attribution challenges and monitor risk exposure, for their investment portfolios.
Paying regard to who is in the chain of trading, and on the other side of the trade itself, has gained significantly in importance since late 2008, when it could have taken days for fund investors to work out how much exposure they had to the collapsing Lehman Brothers.
“Even then the answer was not necessarily accurate,” says Sarwal. “In the past counterparty risk was not seen as a big issue, the view was you are investing for performance of end clients. However since 2008 it has taken on a different profile, it is something that is reported on and firms are required to monitor exposure to issuers, for example.
“Firms are looking at their overall exposure across all portfolios regardless of limits. That was common on the sell-side and banking and you had cross limits between issuer and country and so on.”
Asset managers are now tackling the complexity of counterparty exposure, not just because exposure can come via various asset classes, but also via single groups spread across different countries. DST Global Solutions is helping its some 160 clients using its HiPortfolio asset servicing solution across many jurisdictions around the globe, with such issues.
The clients span asset managers and investors allocating end-client cash into markets and funds, and also administrators aiding the fund management and allocation industries.