On Monday of this week we announced, on behalf of the GAIA (Global Alternative Investment Automation) initiative, that a new set of messaging structures had been created for the alternative investment industry. The group was made up of 7 of the largest alternative fund administration organisations (including Clearstream, Euroclear, DTCC, JP Morgan and Northern Trust) and for the past year has been seeking a solution in order to repeat the successes seen in the mutual fund and pension fund spaces.
The last two days have seen us giving some additional clarity to this initiative at the ITAS Conference in Dublin. The initial reaction, as ever, was one of intrigue, rumour, and perhaps a little anxiety. What was this new thing ? Is it a threat ? Is it the disrupter that everyone has been talking about ? The truth of the matter may, indeed, be that GAIA is a disrupter, but I like to think that it is a friendly one, rather than one that should be seen as a threat.
The group set out with a vision of bringing automation to the alternative funds industry, but wanted to learn from the challenges that former initiatives had seen. So, for this reason, we kept the group very small, very efficient, and very quiet until there was something tangible worth talking about. We also approached this from a business perspective, focusing on the actual business information that needed to be exchanged, rather than entering into "religious wars" around the standards that had to be put in place, or the transport mechanism that would have to be used.
Dominic Hobson, of COO Connect, made the very valid point at ITAS that one of the things our industry loves, which frequently squashes the life out of any initiative is the Committee and Working Group. We were very aware of this issue when we set out on the GAIA path, and that is why we set ourselves a target of producing tangible results within a year, rather than becoming another one of those ineffective talking shops. We have frequently reminded ourselves of this objective and so it was with great delight that we were able to produce these messaging structures on schedule. These messaging structures are publicly available on www.gaiastandard.org
The GAIA journey is far from over, as we have started with subsequent order flows and reporting, but that still leaves pricing, statements and the holy grail of account opening on the "to do" list. However , the important thing is that the industry now has tools at its disposal that it can use to bring operational practices within the alternatives world up to the automation levels of other fund types. At ITAS many warned that the transfer agency space needs to evolve and adopt these new technologies, or it will leave itself open to being consumed by a giant entrant from another industry who doesn't have any legacy technology holding it back. We have now ensured that it is in the hands of the industry to prevent those threats from becoming a reality.
Better still, the GAIA messages fit within the existing ISO20022 formats currently being used by the mutual funds business, which means there is no need to build something completely new, and actually delivers a better return on the investments that many players have already made. So, perhaps this is disruption, but certainly not something to be afraid of, but rather embraced and used to improve the service that we can all provide to our clients.