SEI’s Investment Manager Services (IMS) division has launched a global regulatory risk and compliance platform that centralises the handling of regulatory and compliance functions across investment vehicles, products and jurisdictions.
For years, investment managers have dealt with regulatory compliance in a reactive and siloed way, concentrating on one product type, regulator, or regulatory regime at a time, said Jim Warren (pictured), head of solutions strategy and development at SEI’s IMS division, in a statement.
That approach is inefficient and error-prone, poses risks of non-compliance and can hamper the ability to develop new products and in new markets, said Warren.
The compliance platform has been designed to be standalone, and is not limited to clients of its operating services. SEI will import data for non-client firms, allowing them to connect to the platform regardless of where their fund accounting and administration functions are serviced.
The platform is designed with an open architecture with modules that are available individually or as part of the comprehensive platform. The components include an inventory of regulations in the jurisdictions where an investment manager operates and organises its products; a compliance programme assessment and monitoring against the evolving regulatory inventory, including a detailed best-practice analysis of programme gaps and compliance risks on a periodic basis; a management framework and toolkit for centralised oversight of compliance activities firm-wide; and an automated regulatory filings tool to complete regulatory filings including Form PF for alternative funds, Form CPO-PQR for commodity pool operators, and reporting required by the EU’s Alternative Investment Fund Managers Directive.
In addition, the platform provides a number of tools including investor compliance monitoring; portfolio monitoring and risk analysis; support for chief compliance officers; and ongoing regulatory event updates powered by Thomson Reuters. Investment companies are subject to nearly 500 financial regulators, exchanges, and industry groups, said Warren.
In a recent paper, Evolving in the New Operational Frontier, SEI said that investment frameworks continue to move away from traditional box products and toward alternative, outcome-driven, and solution-oriented products, and identified regulatory costs and pressures among the top business issues asset managers face.
A recent McKinsey & Company benchmarking study of more than 300 institutional participants found that their compliance-related costs increased by an average of 12% annually between 2007 and 2014. The study also pegged the costs of compliance at more than $3bn annually for traditional companies.
Related stories:
European regulators target risk, performance scenarios and cost disclosures for Kids
SEC finds broker-dealers’ structured products suitability controls deficient
Survey reveals escalating costs and concerns over compliance
Sapient: Eroding margins have forced SP providers to reduce risk and operational cost