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Magazine Issues » November 2021

Digital solutions for closed-end fund administration

Garrett_BreenOcorian’s head of global funds, Garrett Breen, talks with Funds Europe about the reporting challenges alternatives managers face in the closed-end space, and why common data standards are needed now more than ever.

The lack of data standardisation in the funds industry is causing many fund managers considerable operational challenges at a time when many are facing fee pressure and higher costs from a greater regulatory burden. As such, there is a growing realisation that common data standards could help improve data governance.

Garrett Breen, head of global funds at global fund services provider Ocorian, says while there has been more work done in the traditional asset management space to standardise data, the alternatives space – and closed-end funds in particular – have lagged behind.

“Although we’re in the 2020s, there is still quite a lot of faxing of information and manual data sharing, which is quite something,” he says. “But it is also a huge opportunity.”

While areas such as AML and KYC have been traditional data challenges for managers of closed-ended alternatives funds, says Breen, the landscape has become more complex in recent years.

“Regulatory reporting is really driving a lot more standardisation now,” he adds. “If you look at larger asset managers who are using multiple providers, they need to get the same data points from all of them.

“So, on one side, the asset managers are standardising the output they require from their admins. And on the other side, the administrators themselves are facilitating that reporting and need to develop their own internal standards to get there.”

Increasingly, alternatives fund managers are looking to third-party service providers to help with reporting commitments. An Ocorian survey of 100 alternative investment managers in March found that 78% of respondents expect to outsource regulatory reporting in the next three years.

“There will be a huge push to rely on service providers as data aggregators over the coming years, which many fund managers are doing themselves right now,” Breen explains.

How Ocorian is helping clients meet the data challenge
When it comes to choosing a third-party provider – whether it’s an administrator, ManCo, depositary or any other – fund managers want to interact directly with their provider to make it as easy as possible to access and compare data.

Increasingly, this is being aided by automation, making straight-through processing and data sharing between GPs, LPs and their providers more straightforward. At Ocorian, Breen says the focus has been on speeding up and streamlining processes and creating electronic channels for receiving and distributing data across the ecosystem.

Greater data standardisation will also benefit LPs, says Breen, allowing access to data insights and analytics through integrated portals.

Operating across a range of different areas, Ocorian can look at information flow from general partner to limited partner via its platform, offering a “single source of truth” that can make data governance much easier.

“We’re doing quite a lot of work on standardising data across all of our jurisdictions; we have a presence in 10 funds services locations globally,” he says. “So, standardising the way that we interact with our clients on a global basis is critical for us.”

As the operating environment becomes even more complex, fund managers will need a partner like Ocorian that has the expertise and oversight to help them overcome their data challenges.

“It’s something that both asset managers and service providers are going to have to spend a lot more time focusing on in the coming years,” Breen concludes. “It’s evolving very rapidly, and if firms don’t keep up, they’re going to be left behind.”

© 2021 funds europe