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Alternative Market Briefing

Outsourcing the middle office helps managers keep costs low

Tuesday, May 29, 2012

amb
Michael Appenzeller
Bailey McCann, Opalesque New York:

Hedge funds that opt to outsource their middle office tasks to a third party provider can realize cost savings of as much as 50% of the cost of keeping that work in-house according to Michael Appenzeller. Appenzeller is co-founder and managing director at Etops Operations Services, a Swiss-based company which provides investment managers with a fully stable, institutional operations platform that supports consistent state operations.

Appenzeller was recently interviewed by Sona Blessing for Opalesque Radio.

"Middle office is something that people traditionally used to perform in house, you could call it the operations of the asset manager," he explains. However, these operations require someone who is a specialist in this type of work and is often a senior level professional, this can be costly for new or smaller funds.

Middle office workers typically get involved after a trading decision has been made executing the trade, and managing it throughout the organization (i.e. settlement, administration, etc). He notes that through the outsourced model, professionals work directly with the asset manager to facilitate those activities in a more scalable way.

According to Appenzeller, the outsourced model provides cost savings through efficiencies in the sense that asset managers are utilizing middle office functions on an as-needed basis r......................

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