Jon Hugill, Group Chief Information Officer, and Hein Gericke, Senior Manager – SA Fund Valuation and Accounting, give an update on robotics process automation (RPA) which Maitland has now extended to hedge fund administration.
Robotics process automation (RPA) is taking many industries by storm. Financial services is no exception and yet we have been surprised to find the uptake still fairly slow among fund administrators.
Maitland is already some way down the line in our traditional fund services business with in excess of 700 net asset values (NAVS) struck daily via our bot “Eric” (named after Maitland’s founder, Eric Pfaff). As a result, our fund accountants have been freed up to focus on the value add to clients, such as reviewing NAVs and the management and resolution of exceptions related to the NAV process.
We have in recent months extended RPA to hedge fund administration in South Africa. With the majority of hedge funds now subject to CISCA regulation and therefore falling under a ManCo, additional layers of costs have been added. Factor in lacklustre hedge performance over the past 18 months, and it is no surprise that the total expense ratio (TER) is such a hot button.
Managers want to see the TER reduced, ultimately to be in line with the TER in long-only funds. We believe one of the ways to achieve this is to automate anything that is rules-based and we have set out to do just this. Within our hedge fund administration process, we have now automated the trade file from the prime broker, the positions reconciliation back to the prime broker and the end-to-end valuation and reporting
In fact, from our side we are now able to deliver on T, although at an industry level, collaborative solutions need to continue to be sought to see how to make this an industry norm. For our part we are actively engaging through ASISA with prime brokers to find a digital solution to the absence of standards in data exchange.
We believe that RPA is all about creating a sustainable platform, one that is ready to receive the anticipated inflows from Linked Investment Service Providers (LISPS), including once Board Notice 90 has been approved by the Financial Sector Conduct Authority which will allow cross-investment from traditional unit trusts into hedge funds.
By investing in the business process side, we will be ready for future growth. A more scaleable platform offering will allow more efficient hedge fund administration which in turn will impact the TER.
In the coming months our focus will be on rolling out RPA more broadly within the hedge fund administration space, allowing our bot to move higher up the value chain.
We are pleased to say that while our RPA efforts across Maitland as a whole have released an effective 11 FTE (full-time equivalents) in capacity, this has not led to retrenchments but rather freed up many from mundane tasks which are relatively low in value and distracting from higher-value activities.
Did you know?
- Maitland services over half of the hedge fund industry, with ManCo clients such as H4, Ashburton, Novare, Realfin, SCI and Investec
- To date we have over 60% of our hedge funds under administration impacted by the implementation of RPA and noted a remarkabale reduction in our error rate.
Benefits of RPA
- 24/7 availability
- Higher accuracy through rules-based processes
- Faster turnaround times
- Reduction in risk
- Auditable decisions for the purposes of ISAE
- Client satisfaction levels up
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Maitland Hedge Fund Services (Pty) Limited is an Authorised Financial Services Provider.