Beyond the Spreadsheet: How Embedded Fixed Income Rules Transform Compliance Burden into Automated Guardrails

In fixed income, the riskiest element of a portfolio usually isn’t a bond; it’s that spreadsheet that many of us still pretend is “good enough.” As one adds portfolios over time, a once-manageable master Excel file becomes harder to maintain, with more tabs, overrides, and one-off workarounds turning day-to-day portfolio management into a manual effort that simply cannot keep pace with scale.

The issue: Fragmented, legacy systems are a pain for managing portfolio rules

Many teams describe their current environment for managing portfolio rules and targets as fragmented: some rules in legacy Excel files, some in an OMS, some in an LMS, and the rest in PDFs and IPS documents. Or worse, yellow sticky note reminders! That fragmentation is why pre‑trade compliance often happens account-by-account in outdated spreadsheets, long after the initial investment idea and also explains why mistakes like compliance breaches or unintended overweight positions aren’t caught until post‑trade reviews – sometimes days or weeks later.

With most RIAs manually maintaining custom client and strategy rules in Excel, fixed income portfolio managers and compliance teams end up wasting valuable research time checking trade fit and allocation size account-by-account.

Automated guardrails: An always-on safety net providing compliance assurance

IMTC’s approach addresses these issues by centralizing rules so that every decision – from idea generation to security selection to allocation – runs through the same rule engine.

What are guardrails? These are rules and targets at the portfolio- and strategy-level designed to keep portfolio managers in line with both investment preferences and hard trading rules. It also allows for fixed income managers to create embedded rules to personalize a one-off account. And, because rules can be created and updated without code, teams can adapt these controls quickly as mandates evolve, new client preferences emerge, or the firm introduces more personalization.

IMTC’s rules engine replaces that spreadsheet layer, acting as an always-on safety net that keeps portfolios aligned with ideal positioning down to the most granular level, turning “we hope we’re compliant” into “we know we’re compliant.”

Why implementing embedded rules matters now

Fixed income managers live with overlapping pressures, including complex mandates, increasing demand for customized accounts, and growing scrutiny from clients and regulators, who now expect firms to clearly show why each portfolio looks the way it does. Yet in many shops, the rules that govern portfolio decisions still live in spreadsheets or disconnected systems, making it hard to produce a clear audit trail that explains why one account received a particular bond or allocation size over another.

Technological stagnation in OTC markets has led to complex pre- and post-trade workflows, resulting in inefficient processes, poor decisions, and errors. Guardrails change that by embedding the rules directly into day-to-day workflow rather than treating compliance as a separate, downstream step.

For example, instead of a PM having to remember “no tobacco, max 5% in CCCs, and keep duration between 4.5 and 5.5,” those rules are enforced automatically on every proposed trade and allocation, so anything that violates a hard or soft limit is flagged or blocked before it ever hits the order ticket. This means you don’t have to rely upon portfolio managers and traders to remember every restriction and target; the system automatically checks each trade idea against set parameters throughout the entire invest-cash workflow.

One client explained why these parameters drove their firm to implement IMTC’s platform:
“We ultimately needed a system that allowed for a tailored rules-based approach to build and maintain client portfolios that is driven by duration targets and sector positioning.”

Rule flexibility that aligns with firms’ unique needs

In IMTC’s platform, what used to be called “compliance” has evolved into a more intuitive framework of three types of guardrails: hard, soft, and at time of purchase rules. This language reflects how fixed income teams actually work, especially when they manage a mix of model-based and highly customized portfolios.

• Hard rules are the non-negotiables e.g., absolute exclusions like “no firearms,” issuer or sector bans, or hard concentration limits that can never be breached. Once set, hard guidelines are applied consistently across portfolios and then enforced automatically for every proposed trade.
  One example is an advisor who identified a restriction to exclude a client’s former employer’s bonds from the portfolio. This preference was communicated to the portfolio manager and implemented as a hard restriction rule within the account.
• Soft rules map to the “buckets” and targets that define how a strategy should look over time, such as duration ranges, sector or state exposure, quality bands, or housing and ESG tilts. A manager might accept being temporarily overweight the utilities sector, for example, but still wants the system to prioritize trades that move portfolios back toward the target range.
  For example, a portfolio manager seeking to protect client portfolios during periods of economic uncertainty uses credit-quality restrictions to dynamically adjust high yield exposure from 15% to a maximum of 5% until macroeconomic conditions stabilize.
• At-time-of-purchase rules introduce controlled flexibility. When markets move or an investment committee sees a compelling opportunity, a manager may intentionally override a soft rule for a specific purchase while keeping hard safeguards intact, without rewriting the underlying rule set or asking someone to recode it.
  An example of this is a portfolio manager who focuses on minimizing day-one mark-to-market impacts and implements pricing rules to ensure bonds are only purchased at attractive levels relative to IDC evaluated prices; this protects clients from seeing immediate losses that could undermine confidence in their investment strategy.

Replacing legacy Excel as the real compliance system

Even when firms own portfolio systems, one theme comes up repeatedly in client conversations: the real portfolio positioning work, as it relates to client and strategy rules, still happens in spreadsheets. That means many teams manually screen accounts one-by-one, trying to remember exclusions, reconcile overlapping constraints, and then backcheck after trades to confirm each portfolio still lines up with its intended targets and restrictions.

IMTC’s safeguards are designed to replace that outdated Excel layer entirely:

• Rules and client customizations are embedded once and carried through every optimization and allocation decision.
• Pre-trade and post-trade compliance use similar parameters, so the system can suggest which accounts should get a bond and confirm that executed trades ingested by IMTC’s blotter are then allocated to the right accounts and with the ideal fill to each account.

The results? Clients on average reported a 90% reduction in pre-trade compliance burden and an 80% reduction in time spent allocating trades by leveraging IMTC. That’s real savings that leads to bottom-line success.   

Personalization and allocation at scale

Embedded rules also underpin something most managers now promise clients but struggle to deliver efficiently: true customization at scale. When every account’s exclusions, soft targets, and IPS-driven nuances are encoded as guardrails, the system can personalize portfolios automatically instead of forcing teams to remember account-specific caveats or maintain parallel legacy Excel trackers.

This is where IMTC’s proprietary waterfall allocator comes in. When multiple accounts are eligible for a bond, the platform considers the guardrails across all those portfolios, then prioritizes which accounts should receive the trade and in what size, whether the firm prefers equitable, pro-rata, or more nuanced weighted allocation. That combination of constraints plus waterfall allocation is what wins over many fixed-income teams, because it connects investment intent directly to compliant, scalable execution. And, like everything else embedded into the software, the logic behind the waterfall is set by the client.

As one client puts it:

“IMTC is integral in creating efficiencies within our investment process… and enables us to create new strategies, tailoring portfolios to fit unique client needs. Managing hundreds of separately managed accounts, IMTC allows us to smoothly allocate and optimize portfolios.”

Of course, in addition to preventing errors, automated and embedded rules give clients confidence, knowing that every idea is automatically checked against the guardrails that define how each portfolio should look, both at the present and in the future. It benefits fixed income PMs and their colleagues by freeing them from legacy, spreadsheet-driven workflows and allowing them to focus their time on valuable activities such as spending time with clients, conducting research, and creating new strategies. After all, this is the area most PMs are most passionate about and love doing, not the middle-office compliance checks.

 And that, at the end of the day, is an advantage no spreadsheet can match.

This paper is intended for information and discussion purposes only. The information contained in this publication is derived from data obtained from sources believed by IMTC to be reliable and is given in good faith, but no guarantees are made by IMTC with regard to the accuracy, completeness, or suitability of the information presented. Nothing within this paper should be relied upon as investment advice, and nothing within shall confer rights or remedies upon, you or any of your employees, creditors, holders of securities or other equity holders or any other person. Any opinions expressed reflect the current judgment of the authors of this paper and do not necessarily represent the opinion of IMTC. IMTC expressly disclaims all representations and warranties, express, implied, statutory or otherwise, whatsoever, including, but not limited to: (i) warranties of merchantability, fitness for a particular purpose, suitability, usage, title, or noninfringement; (ii) that the contents of this white paper are free from error; and (iii) that such contents will not infringe third-party rights. The information contained within this paper is the intellectual property of IMTC and any further dissemination of this paper should attribute rights to IMTC and include this disclaimer.