An investment portal is a web-site that is dedicated to providing tradable investment opportunities. Investment portals either offer investment options from a single source, e.g. investment options just from a single financial institution or bank group, or from several different providers types.
There are two types of trading offered by investment portals: Omnibus Trading in which the portal client opens an account with the portal who then trades on the client's behalf, and Full Disclosure Trading portals in which the portal user has a full business relationship and contact with the bank or fund manager rather than only with the portal provider.
This checklist takes the corporate treasury department through the internal decisions and analysis required before talking to investment portal suppliers, and the key questions to ask suppliers in selecting an Investment Portal. However, Checklists are no substitute for clear creative thought and opportunism. They are the discipline for ensuring no major factors are overlooked. In addition, because this checklist cannot be fully comprehensive, readers must expect to add questions peculiar to their business.
Internal Decisions and Analysis
Work out what are your main objectives for an investment portal, and what the end result would look like, e.g.:
i. cut costs?
ii. improve efficiency?
iii. reduce risk?
iv. ensure treasury investment policy compliance?
v. describe what the end result would look like, e.g.:
- integrated pre- and post-trading, reporting, market research, and back-office
- be able to get our underlying exposure to any country or counterparty at our fingertips, without hiring a clerk to do so and obtain outdated information by the time he’d be finished
- one market place where we can have comparable info and take well informed decisions
- a platform that would allow a one-touch process for dealing and settlement but also booking of trades, daily accruals and monthly dividend payments
- a platform that would let us build our own workflow and risk controls
Define your current process for:
i. selecting new funds and instruments
ii. approving and signing off
List the types of investment funds and instruments by currency to be traded:
- today – types: NAV, fixed term, CNAV, floating, ultra-short traded funds, and for for MNCs off-shore and on-shore
- in next 12-18 months
ii. other investment instruments:
- today, e.g. term deposits, CDS, REPOS, etc.
- in next 12-18 months
iii. investments in emerging markets:
- in next 12-18 months
Decide what type of investment portal and account structure you require:
i. Full Disclosure Trading Portal in which investors hold their own fully disclosed accounts directly with the fund provider
ii. Omnibus Trading Portal (portal provider is the fund account holder and trades on behalf of investors), and whether you want to:
- choose how your investment holding is disclosed to the funds providers? (frequency, communication methodology, etc.)
- have the choice of being visible to external counterparties or not?
- settle directly with funds or through third party using: a single account, a disclosed nominee account, a non-disclosed nominee account?
Questions to Ask Suppliers
User implementation and account administration procedures, including:
i. how set up users in a single centre investments centre and how change?
ii. how set up users in a multi-centre investment structure and how change?
iii. types of user allowed, e.g. view only, trading, 2nd signatory, analytics only, checking and settlement, etc.?
iv. does the portal’s new fund/bank set up process fit with your established fund/bank selection and approval process?
v. implementation time for a fund/bank and what documents are required to open fund/bank account?
vi. how investment holding is disclosed to the funds provider, e.g. frequency, communication methodology, etc.?
Trading functionality, including:
i. user interface, e.g.
- web-based, or requires local software installed?
- customisable trade blotter?
- best price highlighted?
- real-time P&L comparisons?
- instant chat with provider?
- numeric short-cuts, bank holiday calendar, etc?
ii. general processing and performance, e.g.:
- complete straight through processing or some manual steps involved?
- does client have direct connection to the fund providers?
- process for catching and resolving mismatches and settlement errors?
- speed of trade execution?
- request for quotes for non-fund trading?
- ‘what if scenario portfolio modelling’ available?
- no. of concurrent users supported in corporate treasury department and in operating companies?
- peak volume of deals supported per user?
iii. trading process, e.g.:
- maximum number of banks which can simultaneously provide a quote on your portal for MM?
- trade uploading process – manual or automated?
- evaluation of best/worst price/yield?
- operating companies – what facilities available to support organisational structure?
- cancelling a trade process?
- rebate handling processes?
- how catch trade mismatches and/or errors?
- if transactions are carried out direct with the funds by phone and not through the portal, can the transaction be booked into TMS via the portal (from external bank input/reconciliation), and are platform balances updated?
- customising trading rules available?
- treatment of dividends and statements?
- how treat bank holiday processing?
iv. settlement process, e.g.:
- settlement time frame for investments T+0, T+1, etc.?
- settlement process? any manual processes required and, if so, give details?
- are funds delivered direct from client’s account direct to fund’s account, or via a third party?
- redemption of funds in real-time?
- trades/redemptions executed for future settlement?
- deal confirmation process?
v. dividend and statement functionality, e.g.:
- when are dividends from full redemptions available and are they available at time of redemption or is there a delay?
- do you give users the full details of the each fund’s redemption policy?
- is a 2nd trade required to receive interest payment?
- when are month-end dividends available, i.e. after fund closes on the last day of the month or on the morning of the first day of the next month?
- how are the statements sent to the client (i.e. one statement combining holdings in all funds or separate statements per fund?
vi. real-time compliance checks and warnings, e.g.:
- in pre-trade position: if purchase would take user above specified x% of the fund, does portal issue post-trade warning e-mails to designated individuals?
- in post-trade position: fund hare goes above specified x% of the fund, does portal issue post-trade warning e-mails to designated individuals?
- above specified amount, can secondary approval be required?
- flexibility for defining other checks?
- dual approval process – where can this be applied?
- what circumstances trigger the requirement for 2nd approval?
- can trading limits be broken, if secondary approval given? in what circumstances?
- warnings across groups of investments?
- warning or trade halted if exceed global exposure to a counter-party?
- other checks and warnings?
vii. post-trade compliance reporting, e.g.:
- how pick-up any post-trade limit breaches?
- auto e-mail warning if any post trade limit broken to designated individuals?
- other checks and warnings?
Cut-off times for each type of fund and other instruments, including:
i. for purchases (allowing for any time required to route transactions the funds)?
ii. for redemptions (allowing for any time required to route transactions the funds)?
iii. any extended hours for late-day call ins for both purchases and redemptions?
iv. forward trading, for both purchases and redemptions? how far ahead?
v. redemptions - how often are the batches processed for redemptions?
vi. redemptions - how does the client communicate expedited funding requirements?
vii. redemptions - if funds are required for transfer before or in between scheduled batch times, is there a process that can be followed (based on credit or total holdings) to extend a Daylight Overdraft Limit to the client?
Compliance functionality, including:
i. client able to set up own pre-trade compliance checks?
ii. what type of notifications are sent to the client to inform them of pre-trade compliance checks?
iii. what hard and soft alerts are sent to trader, if trade is not compliant?
iv. can investment policy limits per fund be built into the portal?
Reports and analytics, including:
i. reports available, e.g.:
- daily reports on transactions and current holdings?
- reports on position within each fund?
- historical data on funds and for what period?
- reports on yield factors?
- view daily, month-to-date dividends accrued for each fund?
- on downgrading of security or fund?
- exposure on an aggregated basis across all funds based on positions within each fund as well as data from other investments (CD's, TD's, Repo, etc)?
- historical fund data, e.g. yield, AUM, expense ration, WAM, etc. and for what period?
- full electronic audit trail of investments executed and other yields available at that time?
- pre- and post-trade compliance checks reports?
- how frequently report to TMS / ERP system?
- able to amend standard reports?
- criteria flexibility in selecting reports?
ii. functionality, including:
- daily reports sent to TMS – real-time or batch frequency, and what data delivered?
- ability to download reports and/or charts in Excel and/or PDF?
- customised reports? how create?
- frequency of updating fund holding reports?
- how far back is data provided on funds performance?
- general document retention period?
iii. analytics provided, e.g.:
- own analytics and/or integrated third party package?
- links to external analytical services, e.g. Clearwater Analytics, etc.?
- able to import data from other custodians and other holdings, and incorporate in summary reports?
- what-if scenario builder?
Connectivity and integration functionality, including:
i. can portal be accessed from any location?
ii. compatible with which treasury management systems (TMS) and what actions required to implement a new user?
iii. how long does TMS integration process take?
iv. what message formats used?
v. browser access and what security controls?
vi. how integrate with SAP and other ERPs?
Security and business continuity facilities, including:
i. security procedures and systems, e.g.:
- user identification, access management, e.g. two-factor or multi-factor authentication?
- control of user access – full service, reporting only, analytics only, etc.?
- user auditing processes?
- encryption of key data and messages?
- how is client-specific data protected?
- data integrity and transfer protocols?
- frequency of security scans of portal?
ii. business continuity and disaster recovery, e.g.:
- if portal platform is down, can client continue to trade by phone or fax directly with fund or via portal staff??
- if portal is unavailable, how are trades transacted and what is the confirmation process?
- record of service availability over last five years?
- disaster recovery plan and whether ISO27001 compliant, how often tested? can client participate in disaster recovery test?
- back-ups – type and frequency?
- process for new portal version releases and quality assurance/testing employed?
Customer service and support, including:
i. portal availability?
ii. service hours and help desk functionality?
iii. no. of support staff?
iv. standard time for resolution of failed trades?
v. can client escalate portal issues and who are the issues sent to?
vi. self administration, e.g. can user add or delete users, funds, etc.?
vii. customer training
i. end users, e.g.
- does an application have to be installed on user’s PC or is the solution browser based?
- what preparation is required by clients
- how long does the set up of standard data and user permissions take?
- what testing and trial period is involved?
- typically, how long does it take to get end users up and running?
ii. integration with client’s TMS, OMS and ERP systems?
- what is involved for the client?
- testing and trial process?
- typically, how long does this phase take?
Charges and fees, including:
i. portal implementation fee?
ii. TMS and other systems integration fee?
iii. monthly fee?
iv. daily reporting fees?
v. per trade fees?
vi. per user fees per band/package?
vii. setting up new fund fee?
viii. fee for reporting of client investment data to third parties?
ix. settlement fees?
x. charges to the funds or banks?
xi. third party clearer fees?
xii. client training fees?
Further background information required, including:
i. company information, e.g. location, type of company and financial stability
ii. when the portal began operation and history of product
iii. market share and dollar volume through the portal
iv. future development plans, e.g. access to other instruments
v. no. of users, details and references
vi. in case of bankruptcy of the portal company, how are client’s assets protected?
vii. contract/license details including all terms and conditions, e.g. term of contract, notice period for termination, etc.
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