The coronavirus pandemic is frazzling even the best trained middle-office operations managers of US fund management shops who are working in the trenches of a battlezone.
The war isn’t about setting up remote access to IT systems for employees having to work from home or deciding who should do which task and when. Following a basic disaster recovery plan should answer those questions. Instead, the war will be how to survive completing the core operational requirements during extreme market volatility and staffing constraints without knowing for certain when it will be over.
All of a fund manager’s employees will have their respective roles to play. Front-office portfolio managers and traders must keep track of and adjust to market conditions, while compliance managers must ensure their shops don’t fall astray of legal requirements. Investor relations managers will be in charge of assuaging nervous investors and legal counsel will be talking to boards of directors. Yet it is likely the army of middle-office employees that will shoulder the stress of ensuring that all the fund’s plumbing works correctly. The ability of middle-office managers to correctly strike net asset valuations, handle a tsunami of redemptions and manage liquidity will become paramount if a fund is to make it out of the crisis alive, albeit battered. Over-the-counter derivative contracts will also have to be more closely monitored.