The partnership yielded a solution that automates the process of dilution charges.
big xyt, a provider of data and analytics solutions for securities firms, has launched the Portfolio Liquidity Analysis solution, which was developed in partnership with investment management firm Baillie Gifford, officials say.
The solution “enables buy-side firms to gain an independent view” of the liquidity of equity portfolios because of the use of “reliable and consistent market data,” officials say.
“Working on this solution in partnership with Baillie Gifford has provided a new turnkey solution for the buy side. It addresses the major challenges faced by investment managers when managing portfolio liquidity and reduces operational risk and user error with a robust yet streamlined process that automates dilution charges on a daily basis, which saves teams significant research time that can be used elsewhere,” explains Mark Montgomery, head of strategy and business development at big xyt, in a prepared statement.
The dilution levy that investment managers apply as part of their cashflow management process of pooled vehicles “ensures clients are treated fairly and mitigates the impact of price volatility caused by cashflow activity,” according to the announcement.
The big xyt Portfolio Liquidity Analysis tool addresses the buy side’s challenges “when sourcing accurate datasets, which must be harvested, harmonized and processed consistently over time to provide reliable estimates,” according to big xyt.
The new offering “automates the process of dilution application in a way that is data-driven and fair to the existing shareholders. It also provides a quantitative view of the application of dilution charges. When applied correctly, this helps investment managers minimize the impact of trading on a fund’s performance and apply test scenarios to evaluate the effect of more volatile conditions,” officials say.
“The partnership with big xyt was a collaboration between our trading and operations teams. Our aim was to create a robust dilution adjustment and a threshold process for large deals, that is in the best interests of our clients, with high regulatory standards,” says Adam Conn, head of trading at Baillie Gifford, in a prepared statement.
The Portfolio Liquidity Analysis solution is a subset of big xyt’s Open TCA solution for execution analysis, officials say.
big xyt’s tick data analytics cover “more than 120 trading venues across equities, ETFs, FX, and listed derivatives (futures and options), and are available in T+1 and real-time,” officials say. “Our clients include major global investment banks, asset managers, leading exchanges and trading venues, ETF issuers, and regulatory bodies.”
Baillie Gifford is an independent investment partnership founded in 1908 with headquarters in Edinburgh. Its focus is long-term growth investing, officials say. The firm has 1,800 staff members, assets under management of £230 billion as of June 30, 2023, and offices in Dublin, Frankfurt, Hong Kong, Amsterdam, Krakow, London, New York, Shanghai, Toronto and Zurich.
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