RIMES recently held its third annual Data Governance Conference (DGC) in London – 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 senior attendees from asset management firms, hedge funds, custodian banks, insurance companies and other asset owners, to network, learn and discuss about the most topical data governance and data management challenges facing the industry. 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.
Keynote Address: EU Benchmark Regulation – Consequences for the Financial Industry
Alain Dubois – Managing Director and Head of New Business and Product Development, Index Products – MSCI
The combination of the Solvency II EU Directive coming into effect on 1st January 2016 and the Financial Benchmarks Regulation, which in late November 2015 underwent preliminary agreement between the European Parliament and the Council of the EU and is now subject to parliamentary vote, requires asset managers to look more closely at the impact this coming regulation will have for them.
Alain Dubois from MSCI felt that, while it is clear that the industry as a whole is becoming more regulated, the reality for major asset managers is that compliance with the new benchmark regulations will not be an onerous task. These providers are already operating under a stringent compliance framework, including adhering to IOSCO principles.
However, the consequences of regulating indexing and benchmarking are far reaching. All entities that control benchmarks will have to become authorized and all benchmarks declared. Given the increasing variety of benchmark providers from across the industry, it will be those smaller players and ‘self-indexing’ firms that need to closely review their operational and governance processes in order to operate in line with the new requirements.
Aside from compliance, in 2016, the big initiative on investment managers’ roadmaps is to improve data quality by streamlining record keeping, transparency and governance processes. The end result will be more confident European firms better equipped to work across an international framework, particularly those with business in the United States.
Collateral Damage? The Impact of Regulations on Data Management and Data Governance in Investment Management Organizations
With Victor Anderson, Editor in Chief, WatersTechnology; Vipul Chandna, Head of Business Solutions, Sarasin & Partners LLP and Steve Cheng, Global Head of Data Management Solutions, RIMES
A number of investment managers are concerned about upcoming regulation because many of them don’t have established, effective and easy-to-follow data quality check processes already in place. Vipul Chandna from Sarasin & Partners and Steve Cheng from RIMES took the opportunity to discuss why this was the case.
They agreed that it is only since Solvency II and the Financial Benchmarks Regulation appeared on the horizon that investment managers have considered creating clear, unified views of data a business priority.
Further to that, there was no established body mandating that data management should be done in a particular way, meaning organizations were able to track data in ways that were easiest and most effective to them.
The upcoming regulation is set to address both these issues by putting together a solid framework that businesses must follow, one which can be tailored to the size and requirements of a specific firm.
In order for this framework to be successful, the panel contended that there needs to be a cultural shift in investment management organizations. Business leaders need to start leading the charge for change and become champions of the regulation.
Steve Cheng warned delegates that it is essential for firms to:
- Stop relying on the assumption that the regulations will be delayed
- Stop believing that they will come into play slowly
- Ensure they do not simply retro-fit existing, haphazard data management processes to comply with regulation.
You can read the Waters Technology white paper here.
The Operational and Data Governance Challenges of Alternative Assets for the Buy-side
With Jerry Slason, Senior Consultant, Investit and Darell Miller, Head of Business Development, RDS, EMEA, RIMES
With an increasing number of clients wanting to diversify and get more use from their multi-assets, RIMES recently worked with Investit on a study which explored the challenges of alternative assets for investment managers.
Jerry Slason from Investit explained that the study exposed the four main challenges facing investment managers today: organization, operation, systems and data.
While there is a clear move in the industry towards more simplistic models, enhanced systems and improved data governance, Jerry stressed that firms must be realistic about the scalability, cost and integration challenges this move brings with it in 2016.
The research concluded that firms will only benefit from introducing alternative assets if the operating model is properly planned and implemented.
Performance Measurement Data and Standards for Hedge Funds
With Ian Blance, Co-Founder and Managing Director, Voltaire Advisors; Damian Regan, Director in Risk Assurance Services, PwC, and John Simpson, Senior Vice President and Chief Ethics Officer, The Spaulding Group
As Hedge Funds become more regulated, there is increasing pressure surrounding how firms represent information to regulators, investors and the public. Our speakers from across the industry came together to talk about how this pressure is magnified due to issues surrounding transparency, and how funds can be compared on an ‘apples to apples’ basis.
A large part of the panel discussion highlighted the Global Investment Performance Standards (GIPS) as a way for firms to apply more rigor to their reporting. GIPS is a voluntary standard that provides a way for companies to explain what they have done and identifies an industry norm that they can compare themselves to.
Even though it is voluntary, GIPS allows UK funds to show investors that they are meeting recognized standards, increasing their chances of winning new business – particularly with US organizations. The next big step, as identified by the panel, is for funds to educate themselves on what they can do to comply with GIPS.
Data Management and Data Governance for Insurers and Asset Managers Under Solvency II
With Andrew Delaney, Chief Content Officer, A-Team; Melinda Marshall, Market Data Specialist, Aviva Investors; Charles Joseph, Data Quality Manager, Beazley and Giles Arbuthnott, BDS Service Manager, RIMES
The Solvency II EU Directive is coming into effect on 1st January 2016, setting a number of compliance challenges for insurers and asset managers. This session addressed the foremost challenge to understand the scope of data which falls under the regulation and the impact this will have on costs and the speed of reporting.
Our panelists discussed the need for organizations to ready themselves for the 1st January. They agreed that for Solvency II regulation the data devil is in the detail – how data is being used as well as how it is gathered.
Increasing transparency around areas such as how data is used has the knock on effect to help guide and refine costs associated with data and data management. It will also help with third party compliance checking, as firms will be better equipped to check the quality of data being brought into their own systems.
While it will be a challenge for insurers and asset managers to bring their data governance processes up to scratch over the next month, it was unanimously agreed that Solvency II regulation will help improve the quality and effectiveness of the industry in the long-term.
The Total Economic ImpactTM of RIMES Managed Data Services
With Henry Peyret, Principal Analyst, Forrester and Steve Cheng, Global Head of Data Management Solutions, RIMES
Addressing the audience at the third annual RIMES Data Governance Conference, Henry Peyret from Forrester delved into the Total Economic ImpactTM study produced on RIMES Managed Data Services earlier this year.
Henry explained that the study examines the potential return on investment (ROI) that firms may realize by deploying the RIMES Managed Data Services (MDS). He explained that Forrester independently calculated that using RIMES Managed Data Services could be lead to as much as $3.6m worth of value generated in three years.
As the changes in the market and its regulations continue, good data governance and how to achieve it best is a hot and ongoing issue. RIMES Forums and conferences taking place throughout 2016 will carry on gathering the industry together in order to help resolve all predicaments and overcome any possible obstacles.