Driven by the objective of improving operational efficiencies, a leading Hedge Fund Administrator partnered with Patni to consolidate its funds on different platforms.
The Client
A global leader in Embedded Linux distribution, the client provides GNU/Linux based open-source software solutions and offers a family of products.
The Challenge
The Asset Management industry is a highly competitive industry and firms operating in this domain have to constantly deal with challenges such as volatile markets and increasing regulatory requirements. Keen on improving its operational efficiencies, the client sensed a need to consolidate all its funds spread over various fund accounting applications to a common fund accounting platform. However, consolidating the funds from different platforms to one platform was a challenging task.
Some significant challenges for the client included:
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Transitioning a particular fund to the new platform |
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Maintaining the consistency for all fund subscribers on the new platform |
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Addressing the problem of finding skilled and experienced fund accountants for converting a particular fund and transitioning the same to the new platform. |
The Solution
Patni followed a methodological approach for helping the client transition the funds to the new platform. Initially, Patni setup a Centre of Excellence for the fund accounting process and equipped it with a team with deep understanding of the Hedge Funds industry. Most of the executives assigned on the process had rich experience with leading service providers in the industry including custodian banks, mutual funds and hedge funds. The fund accountants were trained on the client's investment platform and business processes. Subsequently, they were certified by the client for live operations. Post certification, the members started assisting the client in the conversion process, from the offshore BPO facility. This team also consisted of a Portfolio Manager, who was responsible for managing and achieving a seamless transition of allocated fund from one platform to another.
As a part of the fund transition process, some key activities performed by Patni included:
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Business Gap Analysis |
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Development of Reports and Interfaces |
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Setting up securities master |
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Verification of accruals |
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Extraction of data, transformation and loading all the open tax lots cash balances and open balance sheet items as present on the date of conversion |
Once the extraction, transformation and loading activities are completed, the Portfolio Manager ensures that the Net Asset Value (NAV) of the fund is reconciled relative to the legacy application. This involves calculating the NAV and performing the daily fund accounting operations.
Following the conversion, Patni tracks the fund for a period of three weeks and ensures smooth operations on a daily basis including daily NAV computation. After this step, the fund is handed over back to the operations team of the client and the conversion is termed as successful. After successful conversion of a fund, the conversion team starts daily fund accounting activities like manual trade processing, corporate action processing and reconciliation of the portfolio with prime brokers and Hedge Fund clients.
Achievements
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Increased accuracy level from 97% to 100% in ‘Securities Master File (SMF)’ setup, using Six Sigma methodology imbibed from Patni's quality management system |
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Successful transition of over $2bn Assets Under Management covering securities like Bonds, CFD’s, Bank Debts and CDS, to the new platform |
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More than 1654 SMF’s under control for conversion |
The Benefits
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Significant cost reduction, system stabilization and process optimization |
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Increased efficiency and effectiveness of the client's service delivery mechanism, made possible by significant increase in accuracy and turnaround time |
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Exchange of best practices resulting in the creation of a highly competent and optimized process flow |
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