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SimCorp poll reveals buy-side is unprepared for Dodd-Frank

Survey of North American buy-side firms shows majority consider Dodd-Frank to be a top priority but do not yet have the right systems in place.

SimCorp, a leading provider of highly specialized software and expertise for the investment industry, today announced the results of a poll of leading buy-side firms on the issue of preparedness for Dodd-Frank’s central trading and clearing requirements for OTC derivatives. Responses revealed a predominant lack of preparedness for coming regulation but that firms are highly focused on compliance.

The survey, which polled over 120 executives from 60 buy-side firms in North America, showed that 72% of firms consider Dodd-Frank to be a top priority for their firm. When asked about system support, 77% of firms stated that they either do not have or were not sure that they have the right systems in place to support compliance with Dodd-Frank’s OTC derivatives central trading and clearing requirements. Only 23% of firms are confident that they are prepared for Dodd-Frank’s OTC derivatives requirements from a systems perspective.

Additionally, the survey revealed a widespread uncertainty around respondents’ ability to comprehensively view OTC derivatives risk and performance. One out of every two respondents admitted that they were not sure their firm was able to capture all OTC derivatives position, transaction and contract data in a single repository for a 360 degree view of risk and performance.

“While specifics around timelines for compliance with Dodd-Frank remain unclear, our message to the industry is to act now in the interest of driving investment performance,” noted David Kubersky, Managing Director of SimCorp North America. “Risk and performance are two sides of the same coin. Whether trading in OTC derivatives or any other instrument, it is critical to have a timely, comprehensive and accurate risk/reward assessment. The system best practices we promote for Dodd-Frank compliance should also be applied when introducing new products, entering new markets and assessing liquidity and exposure.”