In modern and independent asset management (in the following the author uses the German synonym “Finanzportfolioverwaltung”) and next to the development of investment strategies for the customers’ deposit organization is one of the central issues to guarantee the efficient and effective processing and control of decisions. The author of this thesis has worked out a software programme so as to guarantee the extension of dealing with orders, the controlling of returns and the general management of the customers and to make this more transparent.
Table of Contents
1 INTRODUCTION
2 STRUCTURE AND DESCRIPTION OF ASSET MANAGEMENT
2.1 DEFINITION OF ASSET MANAGEMENT
2.2 BASIC LEGAL PRINCIPLES OF ASSET MANAGEMENT
2.3 KINDS OF ASSET MANAGEMENT
2.3.1 ASSET MANAGEMENT AS BUSINESS ACTIVITY CONDUCTED ON INSTRUCTION
2.3.2 TRUST MANAGEMENT
2.3.3 MANAGEMENT OF POWER
2.4 THE CONTRACT OF CONSULTING SERVICE
2.5 PRINCIPLES OF ADVICE DOING JUSTICE TO THE INVESTOR AND THE INVESTMENT
2.6 THE ASSET MANAGEMENT CONTRACT
2.6.1 FORM
2.6.2 CONTENTS OF THE CONTRACT
3 TASKS AND OBLIGATIONS OF THE ASSET MANAGER
3.1 PREPARATORY DUTIES OF INFORMATION
3.1.1 PRINCIPLES
3.1.2 CUSTOMER INFORMATION
3.1.2.1 Contents
3.1.2.2 Time of enquiry
3.1.2.3 Representation of the investor
3.1.3 DUTIES OF INFORMATION
3.1.3.1 General principles
3.1.3.2 Special types of investment
3.1.3.3 Moment of information
3.1.3.4 Special agreements between manager and customer
3.1.3.5 Classification of the customer profile
3.1.3.6 Basic legal principles of guidelines
3.2 MARKETS IN FINANCIAL INSTRUMENTS DIRECTIVE
3.2.1 BASIC PURPOSE
3.2.2 IMPACT ON FIRMS
3.2.3 IMPLEMENTATION TIMETABLE
3.2.4 ORGANISATIONAL REQUIREMENTS
3.2.5 CONDUCT OF BUSINESS
3.2.6 BEST EXECUTION
3.2.7 PASSPORTING RIGHTS
3.2.8 CLIENT CATEGORISATION
3.2.9 REGULATED MARKET AND MTF STANDARDS
3.2.10 PRE-TRADE EQUITY TRANSPARENCY
3.2.11 POST-TRADE EQUITY TRANSPARENCY
3.2.12 TRANSACTION REPORTING
4 GENERAL DESCRIPTION OF FINANZPORTFOLIOVERWALTUNG AND ITS REQUIREMENTS
4.1 CLASSIFICATION OF FINANZPORTFOLIOVERWALTUNG
4.2 THE IMPORTANCE OF THE MARKET MAKER SOFTWARE IN FINANZPORTFOLIOVERWALTUNG
4.3 GENERAL REQUIREMENTS
4.4 TYPICAL TASKS AND REQUIREMENTS
4.4.1 CUSTOMER CONTROLLING
4.4.2 EXECUTION OF SECURITY ORDERS
4.4.3 CONTROL OF EARNINGS
5 SPECIFICATION OF REQUIREMENTS AND DEFINITION OF THE CATALOGUE OF REQUIREMENTS
5.1 GENERAL INFORMATION ABOUT THE CATALOGUE OF REQUIREMENTS
5.2 REQUIREMENT CATALOGUE “CUSTOMER CONTROLLING”
5.2.1 SURVEY OF MANAGED INVESTMENT AND OF MANDATE
5.2.2 CHANGES OF THE VOLUME MANAGED AND THE MANDATES
5.2.3 SURVEY OF THE MANDATES MANAGED
5.3 REQUIREMENT CATALOGUE “TRANSACTION ORDER“
5.3.1 PURCHASE OF SECURITIES
5.3.1.1 Differentiation of kinds of purchase orders
5.3.1.2 Registration of purchase orders
5.3.1.3 Bank specific block orders for security purchase
5.3.2 SALE OF SECURITIES
5.3.2.1 Differentiation of types with sales orders
5.3.2.2 Registration of sales orders
5.3.2.3 Bank specific block orders for security sales
5.4 REQUIREMENT CATALOGUE “RETURN CONTROLLING”
5.4.1 CONTROL OF THE COMMISSIONS RECEIVED FROM BANKS IN TERMS OF CORRECTNESS AND COMPLETENESS
5.4.2 ALLOTMENT OF COMMISSION FOR CUSTOMERS AND ADVISOR
6 DESCRIPTION, LIMITATION AND EVALUATION OF INSTRUMENTS FOR THE DEVELOPMENT OF SOLUTIONS
6.1 INDIVIDUAL SOLUTION BY A SOFTWARE COMPANY
6.2 INDIVIDUAL SOLUTIONS BASED ON MARKET MAKER
6.3 SAP, ORACLE DATA BANKS AND SOLUTIONS OF BANKS
6.4 FLEXIBILITY VS. COST EFFECTIVENESS
6.5 CRYSTAL REPORTS WITH MM TALK AS EXTENSION OF MARKET MAKER
6.6 EXTERNAL SOLUTIONS AS EXTENSION FOR MM TALK AND ADDITIONAL SOURCES FOR CRYSTAL REPORTS
7 SOLUTIONS
7.1 COMBINATION OF POSSIBILITIES OF SOLUTIONS
7.2 CUSTOMER CONTROLLING
7.2.1 DATA GATHERING
7.2.2 REPORT MANDATE
7.2.3 REPORT CLASS SIZE
7.2.4 REPORT ASSET CLASSES
7.3 EXECUTION OF SECURITY ORDERS
7.3.1 INSTRUMENT AND BASIS OF DEVELOPMENT OF APPLICATIONS
7.3.2 ORIGIN OF CUSTOMER DATES
7.3.3 STRUCTURE OF THE APPLICATION
7.3.3.1 Log-In
7.3.3.2 Purchase of securities
7.3.3.3 Sale of securities
7.3.3.4 Survey of registered orders of an advisor
7.3.3.5 Administrative and trade functions
7.4 RETURN CONTROLLING
7.4.1 PROVISION OF COMPARABLE TURNOVERS FROM MARKET MAKER
7.4.2 COMPARISON OF BANK LISTS WITH THE TURNOVERS FROM MARKET MAKER
7.4.3 REPORTING FOR RETURNS BY ADVISORS AND CUSTOMERS
8 EVALUATION OF POSSIBILITIES AND LIMITATIONS OF THE SOLUTIONS
8.1 FUNDAMENTAL EVALUATIONS OF THE SOLUTIONS
8.2 COST-BENEFIT RELATIONSHIP
8.3 ADVANTAGES AND DISADVANTAGES OF THE SOLUTIONS
8.4 SUMMARY AND FINAL EVALUATION
Research Objectives & Core Topics
The primary aim of this thesis is to develop and implement software enhancements for independent asset management ("Finanzportfolioverwaltung"). The author addresses the challenge that small-to-medium-sized asset managers lack the organizational and technical infrastructure of large banks to efficiently manage customer portfolios, control transaction orders, and handle return controlling (kick-backs). The research question focuses on how existing software, specifically the "Market Maker" application, can be extended or augmented by new tools to ensure transparency, compliance with legal requirements, and efficient data handling.
- Analysis of legal requirements and duties for independent asset managers.
- Development of a detailed "catalogue of requirements" for internal software solutions.
- Evaluation of instruments for software development, comparing individual solutions versus Market Maker integration.
- Implementation of solutions using Microsoft Access and "Crystal Reports" for data analysis and reporting.
- Strategies for controlling commissions and "kick-backs" to ensure correct and complete financial documentation.
Excerpt from the Book
2.1 Definition of asset management
Asset management is generally defined as “management of property which does not belong to the manager but to a third person”.1 The manager makes the decisions concerning the investment of money according to the interest of the customer, however at his discretion having to stick to the guidelines which have been agreed upon.2 Other than in negotiating or advising investment where the customer makes the decisions the asset manager is characterized by making decisions by himself.3 Only the manager is in charge of the development of the investment. Bearing the customer’s interest in mind he makes his own dutiful decisions.4
A further distinguishing feature is duration. Whereas information and advice is regularly finished with giving the information and respectively the advice on investment which ends the legal relationship between advisor and customer5, the asset manager is continually responsible for the customer’s investment.6 This legal Relationship only ends on the expiry of the period agreed upon respectively the cancellation of the contract.
Despite this dissociation from other financial services there does not exist a standardized concept of asset management.7 An extensive interpretation of asset management includes all kinds of activities related to capital investment by private or institutional investors in one way or another.8 Asset management can correctly be defined as “management of any kind of asset by institutional and private investors in the form of real values and claims by a manager in charge with all those tasks”.9
Summary of Chapters
1 INTRODUCTION: Outlines the research intent to optimize small-scale independent asset management through software extensions that fill the gap where standard industry solutions are lacking.
2 STRUCTURE AND DESCRIPTION OF ASSET MANAGEMENT: Defines the legal and practical framework of asset management, distinguishing it from general investment advisory and detailing types of management mandates.
3 TASKS AND OBLIGATIONS OF THE ASSET MANAGER: Details the regulatory obligations of asset managers, including preparatory duties of information, customer profile classification, and the impact of MiFID directives.
4 GENERAL DESCRIPTION OF FINANZPORTFOLIOVERWALTUNG AND ITS REQUIREMENTS: Describes the operational reality of the author's target environment and the practical challenges of controlling transactions for approximately 1,200 customers.
5 SPECIFICATION OF REQUIREMENTS AND DEFINITION OF THE CATALOGUE OF REQUIREMENTS: Establishes a "wish list" and functional specification for the new software to solve customer controlling and transaction order management issues.
6 DESCRIPTION, LIMITATION AND EVALUATION OF INSTRUMENTS FOR THE DEVELOPMENT OF SOLUTIONS: Compares various technical development options, weighing the cost-effectiveness of custom development versus integrating existing market tools like Crystal Reports.
7 SOLUTIONS: Presents the practical application of the chosen technical approach, detailing data gathering, report structures, and specific MM Talk syntax for the new software.
8 EVALUATION OF POSSIBILITIES AND LIMITATIONS OF THE SOLUTIONS: Concludes with a cost-benefit analysis and a final review of the implemented software's strengths, weaknesses, and dependency on external providers.
Keywords
Asset Management, Finanzportfolioverwaltung, Market Maker, Software Engineering, Transaction Control, Return Controlling, Kick-backs, Customer Mandates, MiFID, Financial Services, Data Management, Investment Strategy, Compliance, Reporting, Microsoft Access
Frequently Asked Questions
What is the primary focus of this work?
The work primarily addresses the lack of specialized software for independent, small-to-medium-sized asset managers, aiming to bridge the gap between their complex business needs and available market solutions.
What are the central thematic fields?
The core themes include the regulatory requirements for asset managers, the practical technical implementation of "order controlling," and the systematic management of return controlling (kick-backs) from banks.
What is the primary research goal?
The goal is to develop an extension to the "Market Maker" software and utilize complementary tools like Microsoft Access to create a robust, compliant, and efficient system for managing customer data and transaction reporting.
Which scientific and technical methods are used?
The work combines legal analysis of the German "Finanzportfolioverwaltung" with practical software engineering, utilizing SQL data access, Market Maker scripting (MM Talk), and Crystal Reports for business intelligence.
What does the main part cover?
The main section establishes the theoretical legal foundation, defines the functional requirements for software development, evaluates various technical instruments for implementation, and provides specific coding solutions.
Which keywords characterize this thesis?
Key terms include Asset Management, Finanzportfolioverwaltung, Market Maker, Transaction Control, Return Controlling, and Data Management.
How does the author handle the "kick-back" commission issue?
The author proposes an automated control mechanism using imported bank data compared against Market Maker records to identify missing commissions or calculation errors by the partner banks.
What is the role of "Market Maker" in this thesis?
Market Maker serves as the central data pool and primary management software, which is extended by the author to support the specific organizational and reporting needs of the asset management firm.
Are there limitations mentioned regarding the proposed solutions?
Yes, the author notes that while the solutions are cost-effective and practical, they introduce a dependency on the underlying software provider and are subject to the technical capabilities of the partner banks.
- Quote paper
- Leif Richter (Author), 2006, Possibilities and limitations of internal software, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/159296
