Integrating Your Book of Records to Enhance Your Data

In the realm of investment management, effective management of data is paramount. As financial institutions navigate an increasingly complex landscape, the need for accurate, timely, and comprehensive investment data has never been more crucial.

Investment books of records (IBOR) and accounting books of records (ABOR) are vital components in the operational infrastructure for asset managers, asset owners, and administrators. However, the distinctions between IBOR and ABOR — and the mere fact that they most typically run on two separate systems — often lead to inefficiencies and complexities in data management processes.

The role of technology leaders and chief operating officers is to support their stakeholders and to do it cost effectively. That means delivering accurate and timely data, at a cost not detrimental to margin. However, with information stored in multiple systems, maintaining and providing accurate data to stakeholders, including portfolio managers, auditors, and regulators, introduces risk and erodes trust in their investment data. Teams across the front, middle, and back office must have a single, coherent system to compute and source the investment-related data necessary to perform the responsibilities of their role. A unified platform provides transparency into the origins of their data, transformations, and inter-relationships.​

The ability to operate portfolio construction, risk, and trading systems based on a consolidated view of your investment and accounting books of record promotes operational scale.

Understanding the divide: IBOR vs. ABOR

IBOR and ABOR serve distinct but complementary purposes within the investment management ecosystem.

Strategically aligning operations with an IBOR solution enables an investment manager to execute informed investment activities daily without performing the operational rigor required to close the accounting books. An IBOR is designed to deliver an accurate and timely view of investment positions to support front-office functions such as portfolio management and trading. With accurate position and P&L information, managers gain clarity on their cash, positions, trade statuses, and a variety of other metrics they can rely on to make investment decisions. The ABOR relies on the investment activity resulting from those investment decisions to create financial statements and supporting reports at a tax lot and journal entry level of granularity. The ABOR serves as the foundation for back-office operations and regulatory compliance.

Both IBOR and ABOR are essential for managing investment portfolios. However, the traditional approach of managing separate books often results in siloed systems and disjointed processes. Fragmentation not only complicates data reconciliation and reporting, but also hampers a firm’s ability to generate useable and timely insights from the investment data flowing through their systems.

Creating a universal view

Firms investing across public and private markets often have multiple accounting systems to support derivative investments, fixed income, equities, private assets, and more. However, maintaining separate IBORs and ABORs, and potentially multiple versions of each for public and private investments, creates complexity. The intricacy of multiple systems only compounds as you diversify your fund and investment product offerings through organic growth and M&A activity.

One of the primary challenges of maintaining multiple books of record is the struggle to create a consolidated view of your front-, middle-, and back-office operations without slowing down your front-office functions to complete your accounting. Equipping your teams with a single source of truth for all asset classes helps resolve disparate data challenges — a force multiplier that helps you effectively manage the cost of doing business and eliminates siloed system.

When the goal is one system and one process, creating a universal view of all asset classes eliminates the challenges associated with disparate data and siloed systems.

Scalable, cloud-native capabilities can deliver seamless position and cash management, profit and loss generation, and portfolio accounting across asset classes. Consolidate investment data by implementing a holistic view of public and private assets for position management, investment profit and loss, and double-entry accounting. With data on a unified platform, a holistic view of your data lets you thoughtfully analyze the intricate drivers of your investment performance.

RELATED READING: A Data Framework for Public and Private Asset Class Convergence

The benefits of a synchronized IBOR and ABOR

By consolidating IBOR and ABOR into a unified solution, a universal book of record offers several key advantages that empower financial institutions to optimize their data management processes and enhance operational efficiency.

Maintain a single source of truth across public and private assets

Multiple books of record driven by investments into public and private can complicate your technical ecosystem. A single source of truth for investment and accounting data helps standardize your investment lifecycle, minimize operational overhead, and mitigate the risk of maintaining multiple systems. A consolidated view eliminates the need to stitch together data from disparate systems and reduces the risk of errors and manual oversight. By reducing inter-system data normalization and reconciliation exercises, firms streamline operations and enhance efficiency. This shift toward a golden copy of a universal investment book of record lets you focus on generating alpha rather than grappling with data accuracy issues.

Streamline and scale operations

By unifying your investment and accounting books of record, your firm can optimize production of positions, P&L statements, and journal entries. The acceleration of period-end close timelines and reporting deadlines lets you swiftly respond to market demands.

Support growth into new products, expand into new asset classes, and handle increased trading all without implementing new technologies, creating manual processes, or adding headcount. Streamlined operations enable you to easily manage changes in data volumes as you invest into new investment strategies and products and handle increasing volumes of new AUM or balance sheet growth.

Eliminate costly upgrade cycles

Many firms face a heavy burden when they think about upgrading systems to maintain compliance with regulatory updates. With the support from a cloud-based platform, you receive the newest version in your testing environment and can begin running it as soon as you complete any necessary testing, eliminating the need to budget months of technical resources to upgrade your proprietary systems. With a hosted solution, your partner takes on the complexities of maintaining a technical infrastructure, while your firm benefits from lower total cost of ownership. By reducing your technical architecture, your firm can deprecate redundant systems, minimize technical footprint, and eliminate the need for annual system upgrades.

Conclusion

A universal view of books of record empowers investment managers with investment data, as they need it, when they need it, offering several benefits:

• •Aligned front, middle, and back office: Gain a holistic view of positions and P&L data that you can integrate throughout your firm’s investment lifecycle.
• •Consolidated books of business: Scale your technology across public and private markets to support the growth of your existing products and enable expansion into new segments.
• •Support to power the reporting process: Put your closed book views of positions, cash, P&L, and transactions at the heart of your client, regulatory, and management reporting processes.
• •Third-party oversight: Mitigate fund risk through a scalable and independent oversight of your firm’s fund accountants.
• •Streamlined accounting close: A platform fully integrated with your investment P&L can provide the investment-related journal entries and trial balances to support your financial statements.

Integrating IBOR and ABOR into a unified platform represents a transformative step toward enhancing operational efficiency and how you manage data. By consolidating investment and accounting books of record, Arcesium empowers financial institutions to streamline operations, scale intelligently, and derive actionable insights from their data. With Arcesium’s UBOR^®, organizations can unlock new opportunities for growth, mitigate operational risks, and navigate the complexities of an evolving market landscape with confidence.