Background
Insight Investment (previously Rothschild Asset Management) has an impeccable pedigree in financial markets throughout the world.

Insight employs more than 300 people at its London headquarters and manages assets worth more than US $40 billion worldwide.

Despite its conservative image, Insight is forward thinking in its use of IT, especially in its buy-side front office.

Automating Compliance Management
As with many asset managers, Insight had been running its compliance checking quite satisfactorily on a manual basis for many years. The exception was in the firm’s fixed interest accounts, which have been automated on a stand-alone system for some time.

However, at the start of 2001, it became clear that the escalation in regulations around the world and the development of more complex client mandates meant that the days of manual compliance management for any asset class were numbered.

“We have always had very high standards in compliance management and realised that increased automation was becoming a necessity,” said Tony Beaumont, Insight’s Head of Business Systems.

Beaumont and his team set themselves a stiff target of choosing a supplier and having the product up and running by the end of the year.

First step was to appoint a consultant who knew the market for compliance systems, and to put together a steering and selection group at Insight. This proved to be a complex exercise in itself; the group eventually included representatives from all parts of the operation: traders, portfolio managers, compliance staff, IT managers and top level management. Beaumont believes that the structure of this group was a measure of the seriousness with which Insight takes compliance as an issue.

From a long list of 20 possible suppliers, Insight quickly whittled these down to a shortlist of three. The final choice would be based on how well the vendors’ products dealt with highly complex restrictions; how easily they could be integrated into Insight’s existing front office systems; and whether they could handle pre-trade checks as well as post-trade. The Insight panel also wanted to see a history of successful implementations with other asset managers around the world.

Another issue for the panel to consider was how well the shortlisted vendors’ products would integrate with a new data repository, which has recently been introduced by Insight.

All the shortlisted suppliers were invited in to give a demonstration and show how their products met this exacting list of requirements.

“Even at this stage, it was clear that Sentinel from LatentZero stood out from the others,” said Beaumont. “Not only did the product perform well at the demonstration, but the LatentZero people impressed everybody with their knowledge and experience.”

In the end, it was a unanimous decision at the selection meeting. LatentZero and Sentinel were head and shoulders above the competition.

Implementing Sentinel
Insight’s management team decided they would focus their new compliance system on monitoring equity and mutual fund holdings initially, with a view to rolling it out to cover fixed income, money markets and alternative investments as part of a second phase.

The implementation process started with a detailed review of Insight’s business processes, after which LatentZero and Insight agreed a detailed technical and system specification . The joint Insight and LatentZero team then carried out an analysis of Insight’s system architecture in order to write interfaces between Sentinel and the new repository. They also wrote the necessary dealing interfaces to enable the software to handle pre-trade, post-execution and post valuation restriction checking.

“One of the immediate benefits of moving over to Sentinel was that it forced us to clean up our data and we improved our business processes considerably as a result of this work,” said Beaumont. “Indeed the whole implementation process went extremely well, largely because of the quality and commitment of the LatentZero and Insight technical team.”

Sentinel went live at Insight six months from the start of the implementation process achieving the twin objectives of being up and running on time and within budget.