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Comprehensive Standalone solution helps asset managers ease costs and risks while reducing hurdles to global expansion

Monday, September 14, 2015
Opalesque Industry Update - SEI has introduced a comprehensive new global regulatory risk and compliance platform that centralises handling of an investment firm’s regulatory and compliance functions across investment vehicles, products, and jurisdictions around the globe. SEI’s Investment Manager Services (IMS) division developed the suite to help its diverse investment manager clients rein in the escalating costs and risks resulting from the industry’s fast-rising tide of regulations.

“For years, investment managers have dealt with regulatory compliance in a reactive and siloed way, focusing on one product type, regulator, or regulatory regime at a time. But that approach is inefficient and error-prone, poses risks of non-compliance, and can hamper a firm’s ability to grow into new products and markets,” said Jim Warren, Head of Solutions Strategy & Development for SEI’s Investment Manager Services division. “SEI’s platform solves those problems by giving investment organisations an integrated, streamlined way to manage and execute compliance functions firm-wide.”

SEI has designed its new compliance platform as a standalone solution that is not limited to clients of its operating services. SEI will import data for non-client firms, allowing them to take advantage of the platform regardless of where their fund accounting and administration functions are serviced.

The new SEI platform builds on the variety of regulatory and compliance solutions the firm has been providing since the mid-1980s, wrapping them in a customisable framework for managing compliance functions throughout an investment firm. The platform integrates the technologies, services, and expertise that asset managers need to comply with all major regulatory requirements and internal client guidelines for their particular mix of products and markets.

SEI’s recent white paper, Evolving in the New Operational Frontier, identified regulatory costs and pressures among the top business issues asset managers face. Additionally, a recent McKinsey & Company benchmarking study of more than 300 institutional participants found that their compliance-related costs increased by an average of 12 percent annually between 2007 and 2014. The McKinsey study also pegged the current total costs of compliance at more than $3 billion annually for traditional firms. A 2013 KPMG hedge fund survey found their annual compliance costs to total another $3 billion a year.

The platform is designed with open architecture and modular service components, several of which are available individually or as part of the complete platform. The components include:

- An inventory of regulations in the jurisdictions where an investment manager operates and organises its products. SEI has partnered with leading global compliance consultants to develop and continually update the regulatory inventory.

- Compliance program assessment and monitoring against the evolving regulatory inventory, including a detailed best-practice analysis of program gaps and compliance risks on a periodic basis.

- A management framework and toolkit for centralised oversight of compliance activities firm-wide. The toolkit includes a master compliance calendar, timelines, and workflows covering both internal and outsourced compliance activities.

- Automated regulatory filings. The platform leverages fund operating data 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 (AIFMD).

- Investor compliance monitoring. The platform efficiently tracks investor attributes associated with satisfying anti-money-laundering laws, enhanced due diligence requirements, and tax compliance laws in the U.S. (FATCA) and the United Kingdom (CDOT), as well as comprehensive oversight reporting to investment manager clients.

- Portfolio monitoring and risk analysis to facilitate compliance with regulatory requirements, internal guidelines concerning portfolio-level attributes and risk monitoring.

- Support for Chief Compliance Officers. This service includes help preparing for regulatory exams, annual compliance reviews, as well as assistance from SEI’s legal, tax, and compliance experts.

- Ongoing regulatory event updates. SEI’s services include a daily feed of global regulatory news headlines powered by Thomson Reuters.

“Our regulatory analysis shows that investment firms are subject to nearly 500 financial regulators, exchanges, and industry groups. The continual escalation of regulatory rules and reporting requirements greatly increases the demands on information systems. It also compounds the risks of non-compliance as well as executives’ personal liability,” continued Warren.

“Having an efficient and streamlined approach to compliance is now a key competitive factor for managers who are trying to navigate what we call the new operational frontier,” Warren concluded.

What do you think?

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