With ever-increasing reporting obligations, asset managers have less time to focus on their core strengths. So, what can firms do ease the regulatory load? Robert Brimeyer, chief operating officer of Alter Domus, discusses some of the options.
Recent years have seen an exponential growth in the operational burdens on fund managers of alternative asset classes. Every asset management firm now has sizeable and growing reportage responsibilities to both regulators and investors, obligating them to collect data from an ever-growing number of sources, before conveying it effectively via different channels and in different formats.
This adds further layers of complexity to a business, potentially diverting managers’ attention away from their core specialisms – on top of understanding all existing and impending regulations, designing and updating processes to meet these new requirements, and establishing a relevant IT infrastructure for each new set of rules.
New technologies can significantly reduce the disruptive, onerous impact of new regulation, but there is a relatively low level of tech maturity among fund managers – and, rather than learn how to use these solutions to ease the burden, they have typically opted to outsource these responsibilities to third parties.
Subcontracting back-office functions are now very much middle-office functions, requiring monitoring and analysis of intimate details of a firm’s operations. This is a major undertaking on both sides, necessitating extensive system and process integration; the administrator should have a comprehensive, understanding of the asset class(es) in which a firm operates.
In cases where back-office functions are outsourced to another administrator, it requires a protracted relationship-building process between the two third parties. Some firms offer an end-to-end service that combines both back and middle-office functions, but they are few and far between – and they tend to be generalist, lacking the dedicated grasp of markets and asset classes the best middle-office administrators offer.
Another option is to blend in-house and external management, by integrating an ‘off the shelf’, self-service system, which is customised to a manager’s individual needs, and offers all-inclusive resources for identifying, collecting and transmitting data, and crafting reports, across each regulatory obligation.
Alter Domus was the first independent fund administrator to develop an in-house bespoke client portal solution specifically to cater to the diverse needs of fund managers. The portal, Alter Domus Connect, is an industry-leading software solution that streamlines the exchange of information between firms and key stakeholders (including clients and third parties), efficiently and effectively. The portal means that irrespective of where a client is based, and whichever markets they are exposed to, they can access, search, download and send information, share and receive new documents and create alerts for new uploads, at the touch of a button.
Moreover, our firm’s international presence, with offices in 31 countries on five continents, combines cross-border experience with localised knowledge, allowing our clients to implement and manage complex international investment structures. We ensure our clients’ activities and reports are compliant with standards, regulations and practices in operation throughout the world’s key financial centres.
Our dedicated teams also keep an eye on regulatory developments, meaning our clients will never be caught short by new legislation, and will be prepared for all eventualities. Our goal is ensure those we work with and for can overcome the various challenges they face on a daily basis, allowing them to concentrate on what they do best.
With several major regulations and directives on the horizon that impact our industry in general such as Mifid II and Solvency II, this need has never been more imperative.
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