Background
Edinburgh-based Martin Currie is a privately-owned asset management company that invests in international equities for clients worldwide. The company has £7.7 (US$14.1) billion assets under management, and manages money for a range of institutions including pension funds, investment trusts and charities. It also has a range of collective funds including Oeics (open-ended investment companies), Sicavs (off-shore funds) and hedge funds.

Martin Currie is 100%-owned by its employees. It has positioned itself as a ‘big boutique’, specialising in active equity management. The firm has high levels of expertise in specific regions and offers portfolios in which risk and return are clearly defined according to clients' needs.

Automating Compliance Management
As a ‘big boutique’, Martin Currie prides itself on offering the reliability of execution associated with the largest asset management companies, along with the distinctive specialist services and personal attention more common to a small company. The firm plans to continue to develop more specialist and sophisticated services for its clients. During an overall review of its business process, however, it became clear that its future strategy would be hampered by the quality of its existing trading systems.

These legacy systems had initially been built in the 1980s and 1990s and were largely text-based rather than using the more flexible and user-friendly spreadsheet format. The manual processes were highly inefficient, and could only facilitate post-trade compliance.

Martin Currie wanted a product that would increase efficiency and improve control. The company wanted to provide more support for new instruments and integrate with counterparties via FIX to streamline electronic trading. It turned to Investit, the specialist management consultancy for the investment industry. After a competitive evaluation, Martin Currie decided on the Capstone product suite from LatentZero, which incorporates Sentinel, Minerva and Tesseract.

“LatentZero’s entire order management system, coupled with a hugely important first rate compliance system, provided what we were looking for. When we got down to the final two or three vendors, the functionality of the systems was reasonably similar, but LatentZero shone through on two counts -the usability of its system and the quality and the flexibility of the people.” explains Grant Suttie, technical programme manager at Martin Currie.

Implementation
As part of a staged implementation, Martin Currie first rolled out Sentinel, LatentZero’s pre- and post-trade compliance software, in order to reduce risk as soon as possible.

The challenge for the implementation team was sourcing Martin Currie’s data, cleansing it, validating it and then getting it into the system, as well as assessing the rules required. There were 200 – 300 different data attributes to include, and a market data team was set up to manage the process. Data from the legacy system was sourced and cleansed then uploaded overnight in a programme that took six months.

The LatentZero professional services team worked closely with Martin Currie’s own IT team. This proved valuable - particularly when it came to rule building as they could share industry best practices. The LatentZero team provided a work package of 100 days, plus additional time for rule coding, which Martin Currie could use as it needed.

“We were very impressed with the quality of LatentZero’s teams.” says Grant. “We call ourselves a big boutique and consequently we’re very demanding. So we like to work with companies who can accommodate those demands. LatentZero helped us with training and development of our own people as well as assisting with the installation and build - and the team was flexible about coming up to Edinburgh. Although we now have two of our own staff who are trained to handle Sentinel coding, we’d be more than happy to call on LatentZero experts again.”

Benefits
Sentinel has made an immediate difference at Martin Currie. The automatic rule coverage is a huge improvement on the previous system. It provides ready access to the rule base and a clearer view of tolerances and restrictions. With nearly a third of all clients now coded, the change has been extremely well received by the fund managers. “It’s been quite incredible,” explains Grant. “There’s been no negative feedback. I can’t recall any other new system which they didn’t complain about before. Sentinel is unobtrusive and intuitive. Only two or three hours training has been needed and we’ve instructed 40 fund managers in the space of two weeks.”

Martin Currie now has a global pre- and post-trade compliance system that has integrated easily with all other systems. The next project is to install Minerva, LatentZero’s global order management and trading system, by Q4 of 2004 on 6 dealing desks, followed by Tesseract, the portfolio management tool, in the summer of 2005.