Construction of Applications Processing System to Carry out Mutual Fund Transactions using Industrial BPM-Platform

One of the Russia’s and the CIS’s largest independent companies in the field of investment management. The company has control over the assets that are in excess of 155 billion rubles (as of 22.08.08). «Renaissance Investment Management» is one of the leaders in terms of the assets growth rate under the management in Russia and the CIS. In 2007, the volume of assets under the company management grew by 99%, in 2006 — by 110%, in 2005 — by 142%. The company provides for a wide range of investment products and financial services: from the classical stock funds and bonds of emerging markets (Russia, CIS, and Africa) to global investment portfolio of assets of different classes individually compiled for each client.

Details about the Client

Project Summary

In spring 2007, the Group launched a solution development project to support sales of investment units of mutual funds in its own sales office and sales points of its agents, i.e. banks and investment companies. The project was opened in connection with the Group’s needs in terms of solution creation that will provide coordinated operation of information systems of the Group and their partners — Special Registrars.

At the moment, the solution is developed and used by the Group in terms of commercial operation. It includes 8 information systems interacting in the SOA ideology. The specialized system implemented on the basis of the BPM-platform controls the cross-cutting business process of processing applications to conduct operations with shares of mutual funds.

The solution created allows the company to:

  • connect new agents to the sales network of mutual fund shares in the shortest possible time;
  • provide, in all sales points of shares, for the unified service to perform operations on the entire spectrum of documents related to the purchase, redemption, and exchange of mutual fund shares;
  • organize an effective record of operations with investment units of all information systems involved in dealing with applications for shares; in particular, to transfer, in the shortest possible time, the information to the Special Registrar and to receive notices therefrom, confirming the transaction.

Deployed Software

Background

In spring 2007, «Renaissance Investment Management» Group of Companies started preparation of the IT-infrastructure to the rapid development of retail sales network of investment units of mutual funds with the participation of the agents who have their own sales networks. At the time the project start, the back-office system that supports passive transactions of management companies for the purchase, sale, exchange, etc. of mutual fund shares ceased to meet their requirements. This was due to the plans of management companies to substantially increase the volume of transactions with shares of mutual funds. The Group has experienced a demand for new safe flexible solution, which will allow, in response to market changes, to quickly implement business processes upon demand of the management companies.

In this situation, «Renaissance Investment Management» Group of Companies has adopted a number of decisions:

  • to introduce a new back-office system for the record of the passive operations with investment units; use the «old» back-office system for the record of the active operations in the market, i.e. operations that accompany the purchase of assets;
  • develop and implement IT-solution that: a) will make it possible to create a common space for customer service of own sales offices and agents' sales points, b) provide for tools to agents for fast and high-quality customer service, and c) provide for high speed processing of applications to perform operations with investment units.

Solution

In the framework of the first project stage, which took 3 months, Neoflex experts have:

  • studied business processes of sales of mutual fund shares, including the interaction between management companies, agents and Special Registrars;
  • developed business requirements for the implementation of solutions to support the work of managing companies in the market;
  • developed, based on the requirements collected, a high-level solution architecture.

This architecture implied automating business processes involving the sale of shares of a number of specialized systems of management companies: the front-office system for automation of sales points of investment units, back-office system for the record of the passive operations with shares, etc., as well as its partners' systems. For business process management, it was suggested to use the solution implemented on the industrial BPM-platform.

Following the approval of the solution architecture by the customer, Neoflex has developed the terms of reference for its key components, such as application processing system to perform operations with shares of mutual funds and integration solution.

Further, the customer has issued a tender for selection of the solution component and contractors. In September 2007, Neoflex won the tender to develop the application processing system to perform operations of mutual funds on the basis of BPM-platform and proceeded with its implementation. 8 months later, in June 2008, the system was successfully put
into commercial operation.

System Description

The application processing system to perform operations with shares of mutual funds provides the point of sale, wherever they are located, with a full range of operations with investment units, as well as unified service to work with client information — support for customer identification, standardized management of identity documents, address information and bank account details of customer accounts.

Within the system, more than 10 business processes was sold to ensure the implementation of operations on registration of purchase of shares and their exchange, sale, and so on. Each process is initiated by a particular type of documents coming fr om customers in the sales points of shares. Among these documents are:

  • application for purchase, redemption, exchange of investment units, etc., including the applications for the cases when the operation is performed by the broker or trustee;
  • contract of sale on the secondary market and the transfer order;
  • applications regarding changes to the questionnaire of the registered person, or opening of the account, or extract provision.

Each process automates the full cycle of work with the application for the purchase, redemption or exchange of the unit — from registering the application in the system to preparation the client’s documents confirming the fact of the operation. In particular, the system provides for control over the correctness of filling the applications taken by agents, operational control of the course of the application acceptance in the management company and the Special Registrar, getting reports for the conduct of operations.

The process involves the steps of forming the tasks performed by the employees of the management company and its partners, and those steps, during which the system sends information to the systems of the management company and the Special Registrar, or requesting information therefrom. At present, during the process of processing the application to perform operation with the shares involves 8 information systems. In particular,

  • application on shares is transferred to the back-office and accounting system of the management company for its record;
  • application for its registration is transmitted to the Special Registrar’s information system, then the registration data is transmitted in the accounting systems of the management company, wh ere the new status of the application for the operation with the shares is recorded, and so on.

Thanks to the Web-interface, the connection of points of sales to the system is made for a few hours. Another distinctive feature of the system created is a quick modification of any business process according to new customer requirements.

Stages

April
2007
July
2007
August-September
2007
September
2007
February
2008
May
2008
June
2008

April 2007

Neoflex started gathering business requirements to the IT-solution to support the work of the Group of Companies in the mutual fund market.

July 2007

High-level solution architecture, able to support the effective operation of management companies and their agents with large volumes of applications to perform operations with shares of mutual funds.

Following the approval of the solution architecture by the customer, the terms of reference for the integration solution and front-office application processing system has been developed to perform operations with shares of mutual funds and integration solution.

August-September 2007

The customer completed the tender to decide upon the suppliers for the development of the components of the new platform.

September 2007

Neoflex won the tender to develop the application processing system to perform operations with mutual funds.

February 2008

A system for processing applications to conduct operations with shares of mutual funds was developed based on the industrial BPM-platform.

May 2008

The system is integrated into the IT-infrastructure of the management companies. All kinds of functional, integration and acceptance system testing are completed.

June 2008

Applications processing system to conduct operations with shares of mutual funds and a new back-office system were successfully put into commercial operation.

Outcomes

The IT-platform for the work of the Group Company was built on the mutual fund market. The solution was implemented in the SOA ideology. One of its key components — application processing system to conduct operations with shares of mutual funds — supports all stages of the business process of work with the shares.

The logic of the processes implemented in the system is provided by means of the BPM-platform. This helps to achieve rapid changes to existing processes and create new processes.

The system is implemented in a three-tier architecture J2EE that supports reliable operation 24 hours 7 days a week.

The Implementation of a new system provided a reduction of customer service time and transaction processing time with the investment units. This is achieved, in particular, by automating the processes of referring applications (for purchase, redemption and exchange of mutual fund shares) to the Special Registrar to confirm the transaction and receipt of its notifications.

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