A “Perfect Storm of Regulation” — Summary of RIMES’ 3rd Annual Data Governance Conference

RIMES recently held its third annual Data Governance Conference (DGC) at the the Andaz Liverpool Street London hotel – a particularly timely event given that 2016 is set to be the most significant year for regulatory change in the industry in decades.

The conference brought together representatives from the likes of MSCI, Sarasin & Partners LLP, Voltaire Advisors, Ignis Asset Management and Beazley, to name just a few. There were panel discussions and presentations to discuss the likely impact of two sizeable, upcoming EU regulations on asset managers and owners across the globe.

There was much discussion around the combination of the Solvency II EU Directive coming into effect on 1st January 2016 and the Financial Benchmarks Regulation, which underwent preliminary agreement between the European Parliament and the Council of the EU and is now subject to Parliamentary vote, may create a perfect storm of regulation, that impedes financial institutions’ operations for the short to medium term.

Many existing financial data management systems and processes may no longer provide the transparency required by the regulators, leaving asset managers and asset owners obliged to review their current operations.

Speakers at the conference discussed the complications and challenges of bringing current systems up to scratch with the regulations – particularly around the areas of scalability, data quality and cost efficiency – and why these challenges need to be tackled sooner rather than later.

Agathi Pafili, Senior Regulatory Policy Advisor, European Fund and Asset Management Association, (EFAMA), spoke about the issues raised at the RIMES conference and said, “The recent intense regulatory reform at the EU level has brought an important challenge as to its implementation. The new rules take time and effort to be put in place, and it is crucial to first properly implement them, and then carefully evaluate their impact. The European Commission’s plan to build a strong Capital Markets Union is a key challenge for the sector to further support its pivotal role in channeling investors’ capital into the economy.”

Jerry Slason, Senior Consultant, Investit, presented at the conference on a recent study on behalf of RIMES, which explored the challenges of alternative assets for investment managers. He said at the conference, “The study exposed the four main challenges: organisation, operation, systems and data. While there is a clear move in the industry towards more simplistic models, enhanced systems and improved data governance, we must be realistic about the scalability, cost and integration challenges this move brings with it for firms in 2016. Our research concluded that firms will only benefit from introducing alternative assets if the operating model is properly planned and implemented.”

Concluding the DGC, RIMES called on asset managers and asset owners to face up to the challenge ahead and calculate the total economic impact of working with a managed data services provider vs in-house operations. Earlier this year, Forrester independently calculated that using RIMES’ data management services could be lead to as much as $3.6m worth of value generated in three years.

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