The Feasibility of Using an Automated Net Asset Value Validation Tool in an International Investment Bank

Sammer  Markos; Nhien-An  Le-Khac; M-Tahar  Kechadi

doi:10.4236/ti.2010.13021

Sammer Markos^*, Nhien-An Le-Khac, M-Tahar Kechadi

Abstract: Fund administration is a relatively new service that some banks and back office offer Investment Company’s. This service was regarded as “boutique” in some countries as it was not a necessity hence not enforced by law to have independent calculation and verification of a fund price. However, this sector of business was and has been a major factor in the economic boom for many countries worldwide. In general most companies have many human resources tagged to this service. This is mainly due to the high volume of manual work that needs to be carried out to validate a Net Asset Value. If the Net Asset Value is calculated incorrectly and hence not validated correctly then there is huge repercussions for the company that calculated the Net Asset Value (monetary, reputation, losing a client). With the turn in the current climate the operational requirements that was once affordable has snowballed out of control, this is why invest company’s are finding ways to reduce costs and hence use less labour intensive methods or relocate these specific jobs to lower cost countries such as Eastern Europe and India. However, this is not without its own set of problems, some being that most companies and in our case, the company always employs a distributed service requirement. Within the scope of a collaboration project which focuses on a Net Asset Value automated validation solution to replace a labour intensive manual approach. In this paper, we research the feasibility of using such a tool in a funds business of an international investment bank where parts of this process are based in Asia and Europe. Our approach is based on surveying people that are currently working in the Net Asset Value validation process, and in turn analyse the results attained. Throughout this process, we must not only focus on the efficient method of applying a Net Asset Value validation automated solution but we must also provide an overview of the important factors in building a solutions to be used in a fund administration environment.

Keywords: Data Mining, Funds, Investment Banking, Alternative Investment, NAV, Hedge Funds

Cite this paper: nullS. Markos, N. Le-Khac and M. Kechadi, "The Feasibility of Using an Automated Net Asset Value Validation Tool in an International Investment Bank," Technology and Investment, Vol. 1 No. 3, 2010, pp. 182-190. doi: 10.4236/ti.2010.13021.

References

[1] http://www.investopedia.com/

[2] L. L. Gremillion, “Mutual Fund Industry Handbook: A Comprehensive Guide for Investment,” John Wiley & Sons, New York, 2005.

[3] H. Levy and M. Sarnat, “Principles of Financial Management”, Prentice Hall, Upper Saddle River, 1988.

[4] “Mutual Fund Fact Book,” Investment Company Institute (U.S.). http://www.icifactbook.org/

[5] G. N. Gregoriou and J. Zhu, “Evaluating Hedge Fund and CTA Performance: Data Envelopment Analysis Approach,” John Wiley & Sons, New York, 2005.

[6] P. Giudici, “Applied Data Mining Statistical Methods for Business and Industry,” American Statistical Association Publisher, Alexandria, 2006.

[7] J. Han and M. Kamber, “Data Mining: Concept and Techniques,” 2nd Edition, Morgan Kaufmann Publishers, San Francisco, 2006, pp. 67-73.

[8] P-N. Tan, M. Steinbach and V. Kumar, “Introduction to Data Mining Errata,” Addison-Wesley Publisher, Boston, 2006, pp. 66-83.

[9] http://spss.com

[10] W. A. Rini, “Mathematics of the Securities Industry,” McGraw-Hill, New York, 2003.

[11] L. Jaeger, “The New Generation of Risk Management for Hedge Funds and Private Equity,” Institutional Investor Book, 2004.

[12] N.-A. Le-Khac, M.-T. Kechadi and J. Carthy, “ADMIRE Framework: Distributed Data Mining on Data Grid platforms,” Proceedings of International Conference on Software and Data Technologies, Setubal, 11-14 September 2006.

[13] N.-A. Le-Khac, L. M. Aouad and M.-T. Kechadi, “Knowledge Map: Toward a New Approach Supporting the Knowledge Management in Distributed Data Mining,” Proceedings of 3rd IEEE International Conference on Autonomic and Autonomous Systems, Computer Society Press, Athens, 19-25 June 2007.

[14] N.-A. Le Khac, S. Markos, M. O’Neill, A. Brabazon and M.-T. Kechadi, “An Efficient Search Tool for an Anti- Money Laundering Application of an Multi-National Bank’s Dataset,” Proceedings of International Conference on Information and Knowledge Engineering, Las Vegas, 13-16 July 2009.