GAIA hits key milestones as year end approaches
21st November 2016
The final meeting of the GAIA group for 2016 saw the opportunity to reflect on what has been achieved thus far, and also to plan for what looks to be a very busy 2017. From the outset, the GAIA group has set itself a requirement to deliver tangible solutions which deliver clear value to the alternative funds industry, so this forms something of a year end appraisal for the group.
In September 2015 the GAIA group delivered a significant step forwards for the industry, with clear market practice and messaging standards being openly published for subsequent subscriptions and redemptions. These documents provided the market with a consistent approach which can be followed in order to automate their operational processes thereby beginning the journey of risk reduction, processing efficiency and cost improvement that has been in place for some time in the mutual fund community. Importantly, these new developments also allow firms to use the same messaging structures for both their mutual and alternative fund businesses, thereby allowing a reuse of existing operational investments, whilst also reducing the effort required in maintaining these standards going forwards.
Following up on these impressive developments, the next step for 2016 was to ensure that all of these new processes would work correctly, and to also ensure that they received formal recognition from the official messaging standards organisations, such as ISO and the SMPG. On the former point, GAIA member firms began a process of testing with each other, and with Idea Group as the facilitators of the initiative. These tests would progress from theoretical information exchanges, through to full operational processing and, as we reach the end of 2016, there are now several parties who are ready to move towards live message exchange in 2017.
As regards the recognition process, it is absolutely essential for messaging standards to be approved by the SMPG (smpg.info) in order to ensure that they are validated and officially accepted as the global way forwards. The GAIA group obtained this status for the alternative fund messages this year, which allows the industry to be reassured that these standards work, are the ones which should be adopted going forwards, and will be in safe hands as far as future evolution is concerned. Significantly, the work which GAIA had already done, in bringing the alternative and mutual fund formats together, was also accepted by the SMPG and will save the industry at least two years of development time.
Looking ahead to 2017, this is the year where we would expect to see live messaging being extensively used, and some GAIA members already have stated objectives to begin using the messages with multiple counterparties. The fact that these message formats are also part of the compulsory ISO message maintenance, which will be live in November 2017, means that the community of available users will see a dramatic increase in number over the course of the year. Added to these elements is the exciting prospect of message formats and market practice being released relating to the reporting of prices and holdings, which will bring significant value to key processes such as position reconciliation. All of which points to a very busy year ahead.
The GAIA group has a very open approach towards communication with alternative fund managers, and also welcomes fund administrators, custodians or infrastructures to join its ranks. Please contact firstname.lastname@example.org for further information.