Mellon monitors managers
US global custodian Mellon Trust has introduced its Investment Monitor" facility to the European market. The service alerts clients that their investment managers may have broken the rules mandated for running their portfolios.
It can act, according to Dan Wywoda, head of global trust and custody Europe for Mellon in London, as a "first line risk management tool for pension mangers and others outsourcing their investment management".
When a breach is picked up by the system a flashing indicator signals on the client's workstation screen or a buzzer goes off. Clients can lay down very specific or broad principles for their managers and the monitoring system will translate these into rules to screen portfolio transactions, when undertaking valuation and performance measurement in the course of processing the day's trades, usually overnight.
Typically, says Wywoda, it will alert the client when the fund manager goes past the permitted allocation. "The violation will continue to be tracked until it is corrected."
He adds: "We feel it will be very useful for clients when reviewing the fund manager's mandate by being able to show how many rule infringements there were in the period." The facility was developed in conjunction with a number of Mellon's customers in the US and is being tried out by some clients this side of the Atlantic."