March 2014

BACK OFFICE VIEW: Key to solving complex reporting

Melvin JayawardanaNew transparency demands mean alternative investment fund managers without flexible data management resources are finding their time is used up on additional reporting duties that are too complex to bear.

New data requests are coming from the audience asset managers most need to comply with, such as regulators across Europe and large institutional investors demanding transparency for stakeholders.

Regulators want large sets of data involving complicated calculations that need to be aggregated from a variety of sources. Likewise, large investors are increasingly requesting that fund managers provide data sets and customised reports to assist them in answering the requirements of a plethora of local regulatory bodies.

It doesn’t matter whether the asset manager performs these reporting tasks internally or they are delegated to a third party: the manager is ultimately accountable for the timeliness, accuracy and customisation of a growing number of reports built off of a growing pool of data. To remain accountable in the era of the Alternative Investment Fund Managers Directive and intensified transparency – and to keep their heads above water – asset managers must understand three key pints: data complexity; data control; data flexibility.

Data complexity: The data available to, and required by, fund managers grows increasingly complex and increasingly able to be monetised. There is value in knowing the exact number of subscriptions and redemptions at a given time, in knowing where investors are located and in knowing what sort of entities they represent – but only if that data can be aggregated, cross-analysed and output efficiently. Manual management obviously does live up to the challenge; data consolidation and automaton are a must. Control and flexibility are critical.

Data control: Fund managers must be confident in their ability to control this data – to ensure that information sent to not one but numerous regulatory agencies and the many other stakeholders in the investment information supply chain is not only accurate and filed on time, but that it actually arrives and isn’t lost in the digital mail. Control means having the capacity to calculate and report in multiple currencies and languages, and it means having the confidence a number is accurate because it never had the opportunity to be exposed to human error.

Data flexibility: Once that data is under control, fund managers must have the capacity to manipulate it. How must it be sliced and presented in order to meet the needs of regulatory agencies and various institutional investors with specialised and ad hoc reporting requirements? Does the platform have the capacity to automate reporting across multiple regulatory agencies, domiciles and currencies? And does the platform enable communication across roles to allow, for example, the risk compliance officer to confer with analysts questioning the appropriate response to the rationale behind a high net asset value deviation? Flexibility can come in implementing a software-as-a-service (SaaS)-enabled tool that enables workflow and communication across centers of excellence and roles.

When asset managers have complete control over flexible data, they can offload complex administrative reporting tasks piling up under increased regulation and investor scrutiny, automate much of their data analysis and reporting, and qualify delegates to customise client data and reports. In doing so, they can regain time used up on complex administrative reporting demands and use it to focus on higher-value client interactions.

Melvin Jayawardana is European market manager at Confluence

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