I recently participated in a Waters Technology webinar on IBOR (Investment Book of Record). The panelists did a great job of coloring in the grey areas for the growing number of buy-side firms currently weighing the risks and rewards of joining the IBOR movement. However, a brief discussion of the differences between the Accounting Book of Record (ABOR) and IBOR begged the question: What, if anything, is in a name?
An ABOR is a centralized, accounted book of record that can be accessed to support various investment functions. An IBOR is, by definition, exactly that. However, with increasing market and regulatory demands, firms needs to take decision-making, compliance and operational efficiency to the next level. That means they need better access to more comprehensive, accurate and timely data. This has become the hallmark of the modern IBOR.
Unfortunately, another defining characteristic of the IBOR is complexity of design and implementation. Creating a single, real-time system that can sufficiently support the front, middle and back office requires a significant investment of time, effort and expense—one that increases proportionately with the size and complexity of a firm’s infrastructure. For the largest firms, this investment is justified by the business benefits of the IBOR. But for smaller firms, expanding the use of the ABOR to achieve similar results makes better sense.
Historically, data from the accounting system had limited use beyond the back office. It was batch processed at the close of each day and stored in an isolated database. It lacked the timeliness, context and accessibility necessary to support decision-making for the middle and front office. But today’s leading accounting systems function in real- or near real-time, aggregate data from internal and external systems, and provide robust reporting capabilities. To that end, the right accounting system can serve as an effective IBOR solution for mid- or smaller-size firms without the significant resources to implement and support a complex, dedicated solution.
Broadridge’s investment accounting solution, for instance, is built on a real-time platform and links to an open-architecture database with seamless connectivity to market and application data. Therefore, the resulting book of record is, at any given time, complete and accurate enough to provide a solid, contextual foundation for compliance, risk, modeling, trading and other functions outside of accounting. Learn more about Broadridge Investment Accounting.
As long as the resulting book of record provides transparency to all positions and cash throughout the firm based upon real-time data from all sources, does it matter if it’s defined as an IBOR or an ABOR? What, after all, is in a name?
Author Kim Hoover is Vice President of Strategy and Development for Investment Accounting at Broadridge. He can be reached via email at firstname.lastname@example.org.