In today’s tech-savvy society, it has become critical for banks, hedge funds, private equity firms and other financial institutions to pay close attention to their regulatory landscape. This shift into regulatory compliance was caused by the 2008 financial crisis through acts like the Dodd-Frank Wall Street Reform and Consumer Protection Act, which dramatically increased the regulatory requirements of financial institutions (Kenton, 2019, p. 5). These changes helped bring into focus the importance of regulatory compliance to help prevent future economic turmoil.
There is a growing expectation that financial institutions need to strongly consider modernizing their regulatory operations. Without well-managed operations, firms will drastically fall behind in their operational efficiency and will begin to suffer from having to allocate time, personnel and capital to menial tasks that can be automated through the use of technology. This was confirmed by Mike Juergens, a Principle at Deloitte & Touche LLP, who said that by modernizing a company’s operational environment it will “elevate their profile to become an even more valued business partner” (Deloitte Risk, 2019, p. 2).
When analyzing the regulatory space and looking into potential areas where technology can have a meaningful impact, one can undoubtedly point towards data management and enrichment. This can be shown through SEC-mandated forms like FORM PF, 13F, AIFMD and CPO-PQR that require the aggregation and processing of several large data sets (e.g., positions, holdings and returns) in order to complete the questions associated for each filing (FINRA, 2019, p. 3). The answers to these questions can vary by firm, and creating a uniform process can be challenging due to the ever-changing landscape of fund size, structures and strategies. Therefore, these regulatory filings have become extremely time-consuming and labor-intensive for firms to take on.
The lack of expertise and technology in regulatory compliance has led financial institutions to turn to service providers, such as SS&C, who have invested billions of dollars into the development of technology to help firms during their regulatory process. One regulatory product to highlight is the SS&C Fund Services Portal, which comprises multiple built-in product suites that can be selected depending on filing type. Each service offering or software solution has its questions separated by section and allows its users to utilize “answer upload templates” that can be uploaded to the portal to help automate the answer entry process. These features, among others, allow firms to have a centralized system where they can execute all of their regulatory filings to increase their operational efficiency by allowing firms to allocate their time to more pressing matters.
To learn more about how providers like SS&C help firms navigate the complex regulatory space, download our brochure “SS&C Regulatory & Analytics Solutions.”
Kenton, Will. “Dodd-Frank Wall Street Reform and Consumer Protection Act.” Investopedia, 13 Dec. 2019, www.investopedia.com/terms/d/dodd-frank-financial-regulatory-reform-bill.asp.
Deloitte Risk. “Technology: A Powerful Tool to Help Modernize Compliance” The Wall Street Journal, 13 Dec. 2019, https://deloitte.wsj.com/riskandcompliance/2018/12/02/technology-a-powerful-tool-to-help-modernize-compliance/
FINRA. “Mutual Funds” FINRA, 17 Dec. 2019, https://www.finra.org/investors/insights/mutual-funds
Written by Daniel Sanchez
Senior Associate, Regulatory Solutions