IBOR with SimCorp | The Investment Book of Record 1

THE INVESTMENT
BOOK OF RECORD
TAKE THE OPEN HIGHWAY
TO COMPETITIVE ADVANTAGE

As investment management firms move to take full advantage of emerging growth

opportunities, they find themselves exposed to weaknesses in their current
operating models. Learn how an investment book of record (IBOR)
not only remedies these deficiencies and can lead to a source of
sustainable competitive advantage, but also future proofs
operations for years to come.
IBOR with SimCorp | The Investment Book of Record
ACHIEVE COMPETITIVE
ADVANTAGE
WITH SIMCORP’S IBOR
An investment book of record (IBOR) helps safeguard investment
managers against the deficiencies of their current operating models.
SimCorp Dimension is uniquely positioned as the only offering on the
market today to fulfill all 10 requirements of an advanced IBOR solution.
INTRODUCTION
Unprecedented changes in investor preferences have
swept the investment management industry in recent
years. Many of these trends will continue for some
time to come. Asset inflows and cross-flows are mov-
ing away from traditional fixed-income and equity-
based products to alternative asset classes; they are
also shifting from traditional marketplaces towards
emerging markets, such as Asia and Latin America.
From an investment strategy perspective, we are see-
ing a distinct change in preference from actively man-
aged to passive products, including exchange-traded
funds (ETFs).
As investment management organizations evolve
their strategies to capture a share of these and other
growth opportunities, they look to their front-office
teams for innovative offerings to help retain existing
clients and attract new ones. The firm’s front-office
capabilities are paramount here, both in terms of the
ability to generate alpha and to ensure compliance
with the waves of new regulation sweeping the indus-
try globally.
Investment managers are reacting by re-evaluating
their operating models. As they do so, they are
unearthing some hidden truths. Many years of under-
investment across much of the underlying systems
infrastructure, or previous decisions to outsource
some parts of their operations, are hindering their
powers. These include the ability to innovate, to make
sound investment decisions, and to comply with reg-
ulation. They find themselves struggling to establish
the necessary data foundation to run their businesses
effectively in this new environment.
2
DATA AND INVESTMENT DECISIONS
To keep ahead in a ferociously competitive market,
portfolio managers and traders need high quality,
up-to-date position and cash information. Such
information enables them to make the best-informed
investment decisions and to comply with regulatory
requirements.
But the quality and timeliness of such data are of
increasing concern. This especially applies to asset
managers, who are sourcing start-of-day (SOD)
positions for front-office use from internal accounting
systems, or external outsourced service providers.
Where different front office and/or operations teams
work in silos, by asset class, or investment strategy,
the problem is even greater. Asset managers in such
a situation typically:
• Spend a lot of front-office time every morning
ensuring they understand their data.
• Have to make investment decisions during the
day on incomplete, inaccurate data, including
inaccurate cash positions.
• Have no ‘single source of truth’ in respect of
investment positions, including cash.
• Expend significant time and effort in aggregating
data for reporting purposes.
IBOR with SimCorp | The Investment Book of Record
This all results in headaches for the:
• Chief Investment Officer: Wasted time, including
the time of front-office professionals who make
the firm’s money.
• Chief Investment Officer and Head of Trading:
Obstructions to making optimal investment and
trading decisions.
• Chief Executive, Chief Risk Officer, and Chief
Investment Officer: Inability to readily understand
firm-wide risk and counterparty exposures.
• Entire management: Difficulty in meeting reporting
deadlines, whether management, regulatory,
operational, or stakeholder reporting.
• Chief Financial Officer and Chief Operating Officer:
High cost of operations.
HOW THE PROBLEM ARISES
External service providers, or in-house accounting
systems, maintain end-of-day (EOD) records. Such
records are often referred to as the accounting book
of record (ABOR). Overnight, complex SOD process-
es take the EOD data and enrich it to create SOD
positions (see Figure 1). SOD positions should include
known events of the day, such as corporate actions
and interest payments.
But in many cases, the SOD positions are merely
approximations, due to missing or inaccurate infor-
mation, or to inadequate tools and processes. These
SOD positions are the basis for front-office systems
that reflect the impact of trading activities intraday.
This view is often called the trading book of record
(TBOR). Usually intraday or backdated ABOR chang-
es are not reflected in the TBOR before the next day.
Front office Trades Accounting
TBOR ABOR
SOD positions EOD positions
SOD cash EOD cash
Start-of-day
(SOD)
processes
Figure 1: Illustration of a typical trading infrastructure and data flows.
3
DEFINITIONS OF KEY BOOKS OF RECORDS
ABOR – Accounting Book of Record: End-of-
Day (EOD) records of settled investment posi-
tions. These are typically updated overnight to
incorporate certain non-trading activities, such
as corporate actions, to create a SOD TBOR for
portfolio managers and traders.
TBOR – Trading Book of Record: SOD set of re-
cords that is adjusted as trading activities ensue
during the course of the day. This typically lacks
data about non-trading activities that occur
during the day, such as collateral movements,
corporate actions, and resets.
If the front office is not provided with accurate po-
sition views, it will seek to create them on its own.
Hence, each front-office system – or even user – often
establishes a ‘shadow’ position record, adjusting it
manually for errors or missing investment data, such
as corporate actions. However, the TBOR holds no
position history. Perhaps more importantly, it does not
capture all intraday events that have not originated in
the front office, such as collateral movements.
Making such problems worse, many firms operate
with multiple TBORs, with each dependent on the
quality of the SOD positions and timeliness of updates
from the ABOR for its own asset class. In other situ-
ations, multiple ABORs prevail, with each lacking the
essential information on simulated trades or pending
orders, and not updated with intraday transactions.
It is impossible to ignore the fact that this model
prevents firms from establishing a correct, up-to-the-
minute, intraday consolidated overview of investment
positions and exposures. It prevents either the TBOR
or the ABOR from holding the entire truth.
DEEPENING CONCERNS
There was a time when this situation was less prob-
lematic. Portfolio managers and traders could work
adequately with a TBOR that was created overnight.
Although important position drivers, such as cash
in- and out-flows, or corporate actions, were often
missing, the TBOR was seen as providing an accept-
able approximation of positions on which to base
investment decisions.
IBOR with SimCorp | The Investment Book of Record 4

However, the world has moved on:

DEFINITION OF AN IBOR
• The industry’s unrelenting globalization has intro- An investment book of record (IBOR) delivers
duced operational dependencies that challenge control over investment-critical information to
the very concept of an ‘overnight’ position. asset managers by centralizing intraday po-
• The timeliness of all investment information is sitions across all asset classes into a ‘golden
increasingly crucial and no longer optional. copy’. It provides up-to-date information in
• An ever-broadening range of investable securities real time about current as well as projected
and strategies has made the understanding of cross- and historical positions and cash for all events
asset views essential, including counterparty risk. driving the position lifecycle. This enables
• Regulation has made collateral management a portfolio managers and traders to make better
required element in investment decision-making. investment decisions, providing risk managers
• The need to have a holistic view of risks associated with accurate views on exposures and the back
with any action, or inaction, is essential. To have office with precise views on current, as well as
this complete picture, as well as execute trades future cash, liquidity, and collateral positions.
and corporate actions, the portfolio manager
needs to factor in resets, simulations, open trades,
benchmarks, collateral needs, and cash movements.
In practical terms, the IBOR’s purpose is to establish a
consolidated, enterprise-wide, multi-asset class data
TBORs today – especially if they are asset-class spe-
foundation. For front-office users, the IBOR provides
cific – are simply considered inadequate. The conse-
a complete and up-to-date front-office based view
quences of their operational shortcomings cannot be
on current positions and investable cash. Ideally, the
overstated: Many traders as well as portfolio and risk
IBOR combines all the components of the TBOR and
managers are basing their investment decisions and
ABOR in capturing all events intraday no matter their
risk assessments on delayed, incomplete, and inaccu-
origin.
rate position as well as investable cash information.
They simply have nowhere to go for a truly firm-wide
The IBOR is the independent point of reference for
overview of exposures across portfolios, asset classes,
asset managers that:
sectors, geographies, currencies, and counterparties.

• Utilize one or more service providers for

Leading investment management firms have under-
accounting or investment processing.
stood the importance of their data as a source of
• Have more than one order management system
competitive advantage. There are many alternatives
(OMS) in their front office, or
to improve a firm’s underlying data foundation for
• Have more than one accounting system.
investment decision-making, risk management, and
compliance. However, there is growing excitement
The IBOR is the point of consolidation. To ensure this,
around a developing concept in the institutional in-
it must be part of the asset manager’s system infra-
vestment community that may help firms accelerate
structure.
their ambitions in this area – the investment book of
record (IBOR).

INVESTMENT BOOK OF RECORD (IBOR)

An investment book of record equips investment
management firms with the ability to innovate and
scale, thereby differentiating their product and service
offerings for maximum competitive advantage by
providing a comprehensive, real-time, and accurate
data foundation across the enterprise for decision-
making, risk assessment, compliance, and client-
servicing purposes.
IBOR with SimCorp | The Investment Book of Record
Current, historical, projected positions
Front
INVESTMENT BOOK OF RECORD
office/OMS Transaction lifecycle
Simulated
Accounting
Settlement
Events Historical
Trades records
Collateral
Event schedule
...
FOUR OPTIONS TO IMPROVE INFORMATION
Asset managers with a system infrastructure based on
TBOR(s) in the front office and ABOR(s) to support
operations departments have four options to improve
the information on which the front office relies:
• Introduce an IBOR into the infrastructure as a
stand-alone component.
• Extend the accounting or operations infrastructure
to include an IBOR.
• Extend the front-office infrastructure to include an
IBOR.
• Merge the front-office and operations infrastruc-
tures into one integrated front-to-back office
system with an IBOR.
When choosing which strategy to pursue, the asset
manager should consider current and future business
needs, for example, meeting regulatory requirements
or supporting growth strategies. But he should also
take into account specific pain points and current
vendors’/systems’ IBOR capabilities.
At a high level, the IBOR must capture, calculate, and
disseminate as follows:
• Capture position-driving events from a range of
operational source systems.
• Calculate positions based on events, forecasts, etc.
5
Reporting Other systems Custodian
Reconciliation
Ordered Allocated Confirmed Booked Settled
Current
and
Security, contract, and cash positions projected
security
and cash
Valuation and key ratios
Figure 2: Illustration of an IBOR’s elements and interaction with operational systems.
• Disseminate the information to end-users and con-
suming systems.
A number of source systems feed the IBOR every time
a new event occurs. This enables the IBOR to keep
track of the entire lifecycle of the positions. This is
fundamental to the IBOR’s ability to serve as a solu-
tion for the problems described above.
Based on the positions and event schedules, the IBOR
calculates current and projected security and cash
positions. The event schedules include, for example,
coupons or redemptions, maturity of a swap contract,
dividends on both ex and payment date, and expect-
ed restitutions.
THE IBOR AS CENTER OF THE INVESTMENT
UNIVERSE
The IBOR positions are the foundation for all the sys-
tems that receive data from it, some of which are also
source systems. Additionally, it is the basis for recon-
ciliation with custodians, external service providers, or
other systems. Further, the IBOR provides valuation
services, accruals, and analytics, ensuring consistency
across all of the receiving systems.
IBOR with SimCorp | The Investment Book of Record 6

TOP 10 REQUIREMENTS
There are 10 key requirements that an IBOR must TOP 10 KEY IBOR REQUIREMENTS
fulfill in order to provide a complete and up-to-date, 1 Full instrument coverage
front-office based view on current positions and 2 Position management
investable cash, as well as the data foundation for 3 Event management and drill-down
enterprise-wide risk assessment, compliance, and 4 Cash forecasting
client servicing. 5 Security forecasting
6 Reconciliation and exception management
These requirements go far beyond those that conven- 7 Integration to source systems
tional data management systems or data warehouse 8 Market valuation, accruals, and analytics
solutions typically satisfy. In fact, there are very few 9 Distribution to receiving systems
solutions on the market today that are able to deliver 10 Online view of IBOR information
on all of these 10 requirements.

SIMCORP’S IBOR SOLUTION 1. Full instrument coverage

SimCorp Dimension is uniquely positioned in the
industry, being the only solution that is able to fulfill all
of the requirements cited above, and much more be-
sides. The remainder of this paper presents SimCorp
Dimension as an IBOR solution in the context of these
10 key requirements.
One of the IBOR’s main purposes is to provide a
consolidated view of all the assets within the firm
as opposed to a silo-based view on individual asset
classes. Without such a view, it is impossible to readily
understand firm-wide risk and counterparty exposures.

TYPE SECURITIES MONEY STANDARD OTC DERIVATIVES STRUCTURED

MARKET EXCHANGE EXOTIC
ASSET TRADED DERIVATIVES
CLASS DERIVATIVES (EXAMPLES)

Fixed Bonds Bank Accounts Bond Futures Bond Forwards Complex structured
Fixed/Floating/Structured Loans, Commitments Bond Options OTC Bond Options notes/products
Income
Schuldscheine and Facilities Futures on Bond Interest Rate Swaps Exotic derivatives
US MBS Call Money Options Cross Currency Swaps Examples:
Pools Deposits (fixed, Dual Currency Swaps Range accruals
TBA Trades floating) CMS/CMT Swaps TARNs
Asset Backed Securities Bills Swaptions Snowballs
Pass-Through Certificates Commercial Paper FRA/IRF
Convertible Bonds Certificate of Deposit Cap/Floor/Collar
Securities lending
Repos
Sell/buy-backs

Equity/ Equities Equity/Index Futures Equity/Index Forwards Complex equity or hybrid

Rights Equity/Index Options OTC Equity/Index Options structures
Index
(Covered) Warrants Futures on Equity/ Total Return Swaps Examples:
ADR/GDR Index Options TRS on Dynamic Baskets Equity/Index Linked Hybrids
Index Certificates Contracts For Difference Variance/Volatility Swaps
Portfolio Swaps Exotic options

FX FX Spot FX Futures FX Forwards Examples:

FX Swaps Exotic options
FX Options
Exotic FX Options

Credit ABS Index CDS Single Name CDS

Corporate bonds Index Tranches Bespoke Basket CDS
Synthetic CDOs
CDS Options

Inflation Index bonds Examples:

Zero Coupon Inflation Swaps
YoY Inflation Swaps

Other Commodities Commodity Options Examples:

Fund Certificates Exotic Commodity Options
Alternative Investments Weather Derivatives
Catastrophe Bonds

Figure 3: Illustration of SimCorp Dimension’s extensive instrument coverage.

IBOR with SimCorp | The Investment Book of Record
Hence, the IBOR must handle all the instruments the
asset manager trades – equities, fixed income, cash,
foreign exchange, money market, exchange traded
derivatives (ETDs), over-the-counter (OTC) deriva-
tives, structured products, alternative investments,
commodities, etc. More-over, the IBOR must support
all of these instruments consistently, for example, with
respect to position and event management, forecast-
ing, and valuation. This requires that the IBOR provides
in-depth business functionality across all asset classes.
SimCorp Dimension’s extensive instrument coverage
is amongst the most comprehensive in the industry,
including a vast array of standard instruments, as
well as tools for modeling additional derivatives
(see Figure 3).
2. Position management
SimCorp Dimension provides position-keeping for
all instruments and cash accounts by managing the
entire position lifecycle. It delivers this as and when
events ensue that affect positions in real time. It in-
cludes events that occur right across the business –
in the front office, middle office, or in investment
processing and accounting.
This extends across simulation/what-if > order place-
ment > order execution > trade confirmation > trade
settlement/physical delivery, and post-settlement
events, such as closing down periods for reporting, as
well as backdates due to erroneous transactions.
SimCorp Dimension handles multiple position levels,
typically split into four: 1) simulation or order;
2) executed but not confirmed; 3) confirmed and con-
tractual; and finally 4) settled and physical delivery.
SimCorp Dimension reflects the reality that ‘position’
means different things to different people. Hence, it
allows users to individually define how to view po-
sitions by handling all permutations of the above.
For example, one user might need to view positions,
including open orders for one asset class, or portfolio.
But for another asset class, or portfolio, he only needs
to see the positions based on confirmed trades. Then
again, a second user might require completely differ-
ent views altogether.
SimCorp Dimension allows the grouping of positions
according to users’ needs, for example, by portfolio,
strategy, custody account, clearing house, or counter-
party. It also reflects whether the security position is
lent out, or pledged as collateral.
7
SimCorp Dimension also supports amendments and
deletions that impact the positions, including backdat-
ed changes. Additionally, it provides look-through and
decomposition of instruments, such as index futures
or structured products, and keeps track of position
history with the ability to lock down periods in order
to re-create historical position views.
3. Event management and drill-down
Most commonly, buying or selling securities drives
changes in positions. However, also driving changes
are events, such as corporate actions, redemptions,
maturity of contracts, close or partial close, roll-overs,
exercise, resets, and collateral movements. While in
an IBOR context, all of these events may originate in
other systems, SimCorp Dimension contains business
logic to calculate how they impact positions across
the entire position lifecycle.
Unlike in purely position-based IBOR systems, SimCorp
Dimension maintains a link between positions and
events to provide drill-down capabilities. This is abso-
lutely essential for efficient reconciliation between the
IBOR and source systems. SimCorp Dimension makes
it possible to drill down from any position in any secu-
rity or cash, and whether simulated, executed, con-
firmed, or settled, to the individual events that have
affected the position over time. It is even possible to
overlay an approval process, for example, utilizing
automated threshold tests and alerts to secure data
accuracy.
4. Cash forecasting
The amount of investable cash available is crucial in-
formation in investment decision-making. Without this
information, it is impossible for the Chief Investment
Officer’s team to perform optimally.
SimCorp Dimension holds both current investable
cash and forecasts of future cash positions, including
all events that impact the cash accounts: Active in-
vestment decisions, such as buys and sells, close and
partial close, foreign exchange, and roll-overs. Critical-
ly though, it also incorporates other types of events
that do not originate in the front office, but which can
have a significant impact on cash. Hence, it covers
fees and other payments, interest payments, cash col-
lateral movements, corporate actions, cash injections,
fund issues and redemptions, and coupons.
Cash forecasting could reside in each of the receiv-
ing systems where the information is primarily used,
for example, the order management systems (OMS).
IBOR with SimCorp | The Investment Book of Record 8
IBOR with SimCorp | The Investment Book of Record
However, most of these systems do not provide the
necessary business logic to handle complete and
accurate cash forecasting. Only SimCorp Dimension
contains all the events impacting cash positions. Also,
the advantage of having the cash forecast in SimCorp
Dimension is that many different users across different
business areas can utilize the cash forecasts, ensuring
a common and consistent view across the firm.
Cash forecasting also requires knowledge of future
events. Unlike offerings that fail to include event
management functionality, SimCorp Dimension can
capture all the information necessary for forecasting:
Upcoming corporate actions, fixed-income cash flows
and derivatives events, such as exercise or maturity.
Much of this information is typically stored in the
security master (i.e. cash flows), or derivatives con-
tract definitions (contract events). Hence, it would be
only natural to see the security master as part of the
IBOR – and indeed SimCorp Dimension is routinely
deployed in this way. It connects to data providers
and incorporates data cleansing functionality, includ-
ing tests for reasonableness of data changes, ensuring
high quality and creating a reliable ‘golden copy’.
5. Security forecasting
With increased volumes in collateral, repo, and lend-
ing, the ability to forecast security balances becomes
equally as important as forecasting cash positions.
Without an event management capability, an IBOR
could not provide security forecasting to portfolio
managers.
SimCorp Dimension forecasts security balances based
on all types of future events: For example, buys and
sells, maturity, stock collateral, repo, lending, corpo-
rate actions, and redemptions.
As with cash forecasting, security forecasting could
in principle reside in each of the systems used by the
information consumers, such as the collateral desk,
or portfolio managers and traders. However, SimCorp
Dimension can capture all of the relevant events, with
the advantage that it creates comprehensive, reliable,
and consistent forecast views that any relevant user
can utilize.
6. Reconciliation and exception management
One of the IBOR’s fundamental aspects is that it is
a central place where data from disparate sources
is consolidated and checked for quality. To ensure
this, SimCorp Dimension includes reconciliation and
exception management tools. Data values in SimCorp
9
Dimension are compared to those of the source
systems, reconciled by use of parameters, such as
absolute or relative tolerances.
What’s more, SimCorp Dimension provides compre-
hensive alert management and drill-down capabilities
that allow users to overview exceptions and dig into
position discrepancies all the way down to the un-
derlying events. These are essential tools in efficient
case management to provide overview, focus on
exceptions, and for quickly locating the source of any
discrepancies.
Portfolio managers and traders insist on access to
the most complete, accurate, and up-to-date view of
positions and investable cash. In that respect, the in-
vestment management firm must decide whether the
IBOR should just mirror the information of the source
systems, or whether it should have ‘its own view of
the truth’. The real value of SimCorp Dimension, when
implemented as an IBOR, is maximized when it is used
as the ‘golden copy’, as this brings with it a number of
significant advantages.
For example, the IBOR must be able to include a
corporate action before the event takes place, as it is
essential information for the portfolio manager’s deci-
sion-making process. This information may not exist in
the accounting system, because from an accounting
perspective, there is no need to know until the event
has actually taken place. What’s more, if the source
systems suffer from data accuracy issues, the IBOR
will simply mirror the inaccuracies and errors, render-
ing the IBOR data perilously redundant.
SimCorp Dimension distinguishes between events
caused by active decisions, such as buying or selling a
security, and events that originate from outside of the
firm. Events from active decisions should be obtained
directly from source systems, whereas ‘passive’
events, such as many corporate actions, rate-fixings,
resets, etc., are best managed in SimCorp Dimension.
Letting SimCorp Dimension handle these events
across instruments allows for reconciliation against
the source systems to significantly improve data
quality.
7. Integration to source systems
SimCorp Dimension effectively integrates to other
systems for capturing relevant events. The interfacing
tools utilized are standard throughout the system –
irrespective of the type of data for import, the same
tools are used. This consistency greatly simplifies the
development of interfaces.
IBOR with SimCorp | The Investment Book of Record
You can also use SimCorp Dimension to import data
formats, such as XML, CSV, SWIFT, or FIX via multiple
transport mechanisms, such as web services, FTP, IBM
Websphere, or an Enterprise Service Bus. SimCorp
Dimension also fully supports event-driven interfacing,
which is important to ensure the IBOR is as real time
as the source systems allow.
8. Market valuation, accruals, and analytics
Different users across front and middle office will have
different needs when it comes to valuation and analyt-
ics. One portfolio manager may need real-time prices;
another may need only snapshot prices; while a risk
officer may need new prices and analytics only once a
day. Some portfolio managers only trade liquid stocks
where a quoted market price is readily available, while
others may trade OTC derivatives where valuation is
based on a theoretical price model.
Derivatives and collateral positions must be marked to
market according to frequency and valuation method-
ologies agreed with the counterparty, or as stated by
the clearing house. Front- and middle-office users also
need accrual information, such as accrued interest on a
bond, daily margins on bilateral derivatives contracts, or
accrued management or custody feeds. It is not accu-
rate enough to only register accruals when they settle.
SimCorp Dimension contains valuation, accruals,
and analytical models covering the entire instrument
universe. This data can be either imported from data
providers, or calculated based on an extensive library
of pricing functions. SimCorp Dimension also includes
advanced fee capabilities (e.g. high water marks) that
can calculate accrued and expected fees, which are
subsequently reconciled against the actual payments.
Just as for cash and security forecasting, market valu-
ation could reside in each of the consuming systems.
However, a significant advantage of including it in the
IBOR is the resulting consistency in the utilization of
these figures and the related calculation models. The
fee calculation engine in SimCorp Dimension allows all
consuming systems to share the same accruals. Also,
at specific times – for example, end of day, or at the
time of striking the official net asset value (NAV) of a
fund – many users want to use the same exact prices,
market values, accruals, and analytics.
SimCorp Dimension has the additional advantage of
providing the ability to aggregate exposures, such as
counterparty and issuer exposures on firm level. This
goes beyond market valuation, and is only possible
because SimCorp Dimension has complete position
and contract information. The aggregation is based
10
on full look-through into the underlying elements of
derivatives, collateral, and structured products. This
advantage translates into significant cost savings as
you can pull together all the required data in your
daily operations.
9. Distribution to receiving systems
All of your calculated information in terms of positions,
valuations, and analytics, as well as cash and security
forecasts, must go out to a range of consuming systems.
SimCorp Dimension offers an advanced data extract/
transform/load toolset. It can publish data in multiple
formats, such as XML, CSV, Swift, or FIX via a range
of transport mechanisms, such as web services, IBM
Webspere, messaging, or FTP. As for integration with
source systems, you can accomplish event-driven dis-
tribution to receiving systems immediately as events
occur in near real time.
To ensure timeliness and data quality, SimCorp
Dimension also gives you data change capture and
alert functionality, as well as data quality checks.
10. Online view of IBOR information
Distributing data from SimCorp Dimension is one
thing. However, the receiving systems – especially
legacy systems (see definition in the box below), or
those of narrow purpose – may struggle to consume
or integrate information effectively. An IBOR should
provide the user with a direct view to the information
it holds. For example, many OMSs cannot represent
the IBOR position information correctly. This applies
to marking a security position as lent out, or pledged
as collateral, for instance.
SimCorp Dimension provides front office users with an
accurate and comprehensive view of current positions
and investable cash, market values, accruals, and ana-
lytics, as well as cash and security forecasts. You can
configure the view seen entirely to your user needs.
DEFINITION OF A LEGACY SYSTEM
An investment management system that is
infrequently updated; and that is often running
on outdated, poorly-documented, or obscure
technologies; and that has difficulty in automat-
ing or adapting to business processes, as well
as providing a real-time consolidated overview
of the business.
IBOR with SimCorp | The Investment Book of Record
Middle office Portfolio
management
and trading
Risk Equities
Performance Fixed income
Attribution Derivatives
Compliance FX/MM
Alternatives...
SimCorp Dimension as IBOR
Figure 4: Illustration of a logical system infrastructure and its main data flows.
IMPLEMENTATION OF THE IBOR
Figure 4 illustrates a logical system infrastructure and
its main data flows. The IBOR calculates positions and
cash – along with cash and securities forecasts – to
provide the foundation for your front- and middle-
office analysis and decision-making.
SimCorp Dimension captures all of the events that
impact security and cash positions originating from
front office or investment processing, or – in the
case of backdates – from the accounting system. To
ensure data quality, SimCorp Dimension reconciles
with accounting systems and external parties, such as
custodians and clearing houses.
Additionally, SimCorp Dimension provides a foundation
for front- and middle-office analysis and decision-mak-
ing. But often there are additional pain points in the
broader infrastructure. One could be a legacy account-
ing system that restricts growth into new asset classes
or geographies. Another could be a system infrastruc-
ture that has many systems and integration points.
These make it very costly to operate on a daily basis
or to periodically upgrade systems within it. Since
you can largely implement an IBOR without impact-
ing the existing operational systems, infrastructures,
and flows, doing so is a natural first step. Once you
have installed the IBOR, your asset manager can then
address other pain points.
11
Investment Accounting
procession
Confirmation, settlement NAV
Corporate actions Valuation, accruals
amortization
Collateral
General ledger
Lending, FX, MM
Fees...
Reconcile
Four options with one solution
Earlier in this paper, we listed the four major IBOR im-
plementation options. Here we describe how SimCorp
provides an IBOR solution for each of the options as
follows:
Introduce an IBOR into the infrastructure
1 as a stand-alone component.
This is the situation as described above.
You implement SimCorp Dimension along-
side the existing infra structure as a new component.
Extend the accounting or operations
2 infrastructure to include an IBOR.
Unlike most accounting only systems,
SimCorp Dimension can operate as both
an IBOR and an ABOR in the same system. This means
that if required SimCorp Dimension can serve as your
accounting system based on the ABOR. At the same
time, it can act as the IBOR that captures all intraday
events as described above. In this set-up, SimCorp
Dimension automatically handles the reconciliation
between the IBOR and ABOR with the fundamental
system architecture ensuring that the IBOR and ABOR
are always aligned and consistent.
Extend the front-office infrastructure to
3 include an IBOR.
Unlike most front-office-only OMSs,
SimCorp Dimension’s Front Office Suite
 IBOR with SimCorp | The Investment Book of Record 12

SIMCORP DIMENSION – AN INTEGRATED SYSTEM

ALTERNATIVE RISK CORPORATE INVESTMENT GENERAL CLIENT

MARKET DATA CLIENT ASSET
INVESTMENTS ANALYSIS ACTIONS ACCOUNTING LEDGER COMMUNICATIONS
MANAGER MANAGER MANAGER
MANAGER MANAGER MANAGER MANAGER MANAGER MANAGER

INVESTMENT CASH AND FUND DATA

RECONCILIATION ORDER COMPLIANCE PERFORMANCE SETTLEMENT COLLATERAL
BOOK OF RECORD SECURITIES ADMINISTRATION WAREHOUSE
MANAGER MANAGER MANAGER MANAGER MANAGER MANAGER
MANAGER MANAGER MANAGER MANAGER

Figure 5: Illustration of SimCorp’s solutions portfolio in the IBOR context.

includes an integrated IBOR. Hence, it handles the SUMMARY

TBOR and IBOR in the same system. In this configura-
tion, your front office runs truly independent of all
accounting systems or service providers since it
directly captures all events across all asset classes.
Merge the front-office and operations
Many asset managers have complex IT infrastructures
with many systems and integration points. Others
may have outsourced operations and related systems.
Often such architectures are based on a separation
between the TBOR and the ABOR. This leads to
investment decisions based on an incomplete, out

4 infrastructures into one integrated front-

to-back office system with an IBOR.
of sync, and hence incorrect view of positions and
investable cash.
Here you use SimCorp Dimension to
handle all asset management functions front-to-back The IBOR solves these problems by capturing all
across all office operations, as well as accounting. events across all asset classes and systems to main-
There is just one common ‘book of records’. While tain a position record that is always up-to-date and
used across the entire organization, each and every correct. This position – along with investable cash –
user can define their own views of the data they need is available to front-office users as a far better founda-
for daily work. For example, front-office users can tion for investment decisions and risk assessments.
have their IBOR views, while operations users have
their ABOR views. The data in all views remains entirely
consistent all of the time. In this case, SimCorp Dimension
serves as the TBOR, ABOR, and IBOR simultaneously.

SimCorp Dimension’s configurable design supports any

of these options. It also offers the choice to expand
functional coverage over time to achieve a more effec-
tive, efficient, and simplified systems infrastructure.
IBOR with SimCorp | The Investment Book of Record 13

CONCLUSION
SimCorp Dimension fulfills all the 10 key requirements
of an advanced IBOR solution. These requirements
cover the capture of data from all source systems in
all formats utilizing different communication technol-
ogies. The IBOR’s central function is to use events to
calculate positions across the full lifecycle of all asset
classes. SimCorp Dimension also provides you with a
range of additional functions, such as position history,
lock-down periods, handling updates, cancellations,
and decomposition of structured products.

In addition, SimCorp Dimension forecasts cash and se-

curity balances and contains market valuation and key
ratios functionality. All of this requires the advanced
business logic that SimCorp Dimension has. Finally,
SimCorp Dimension disseminates the information to
other systems and offers the end-user his or her own
view of the information it holds.

SimCorp Dimension is modular in architecture. Hence,

it is flexible enough to be implemented in many differ-
ent operational environments: As a stand-alone IBOR;
as a front-office system with an integrated IBOR; as
an operations/accounting system with an integrated
IBOR; or as a front-to-back system with one common
book of records.

With SimCorp Dimension at the core of your operations,

you have the breadth and quality of data you need for
accurate investment decision-making, enterprise-wide
risk management, and regulatory compliance.

Leveraging SimCorp Dimension as an IBOR can have a

significant and positive impact on your business, free-
ing up key resources to focus on the core business,
providing the foundation for innovation, and improv-
ing your ability to tap into new growth opportunities.
ABOUT SIMCORP
SimCorp provides integrated, best-in-class investment management solutions
to the world’s leading asset managers, fund managers, asset servicers, pension and
insurance funds, wealth managers and sovereign wealth funds. Whether deployed
on premise or as an ASP solution, its core system, SimCorp Dimension, supports
the entire investment value chain and range of instruments, all based on a market-
leading IBOR. SimCorp invests more than 20% of its annual revenue in R&D, helping
clients develop their business and stay ahead of ever-changing industry demands.
Listed on NASDAQ Copenhagen, SimCorp is a global company, regionally covering
all of Europe, North America, and Asia Pacific.

For more information, please visit www.simcorp.com.

ONE SYSTEM FOR A COMPLEX WORLD

LEGAL NOTICE
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reasonable endeavors to ensure the accuracy of the
information. However, SimCorp does not guarantee
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