Regulatory Client Challenges
List of Challenges Our Clients Face in Regulation
Whether enforced by regulation, adopted for operational best practice or working with a collateral manager, the collateralisation solution brings its own set of challenges to our clients. Some clients choose to outsource the function but still face the issues of interfacing their systems with those of the collateral outsource manager, making the requisite payments as and when required. Other clients who choose to run collateral internally have daily collateral calculations, reconciliations and payments/receipts to process, whilst dealing with any collateral disputes and chasing fund managers to raise collateral on calls due. With the advent of central clearing these tasks have not only become more onerous but have impacted the front office, changing the way in which the front, middle and back office need to interact.
A key part of the challenge for all aspects is the back office, ensuring systems and processes are in place to manage the client's collateral requirements - insourced or outsourced. With the mandatory clearing of non-cleared OTC derivatives coming in in March 2017, the pressure is on houses that only trade FFX to have a working solution. ISC continues to work with clients to develop their operational capability in this area.
ISC's deep pool of industry professionals has extensive experience in covering clients' various collateral challenges, enabling asset managers to manage change within their organisations and to outsource to collateral managers. ISC has also worked with clients to define new target operating models to solve the collateral challenge, delivering their preferred solution to market more quickly and ensuring cost-effective change.
The regulatory requirements surrounding Solvency II affect not only insurance companies; there are significant data requirements for asset managers who have insurers as clients within the Pillar III requirements. The scope and scale of asset data needed by insurers is broad, which poses challenges in sourcing and maintaining data. Coupled with changes and adaptations to existing systems architecture and the possibility of new solutions, the amount of change within an organisation is considerable.
ISC has worked with a number of clients defining and building asset data solutions. This has encompassed changes to systems and data architecture, locating sources, internal and external, for new data and changing and creating new business processes across departmental boundaries, ensuring clearly defined roles and responsibilities.
With our clients and partners, ISC continues to provide cost-effective consulting. Working within the time frames set by regulators and clients, ISC has delivered successful Solvency II projects, ensuring our clients are able to comply with their regulatory responsibilities.
Since the end of the Great Recession, the role of regulation in the asset management world has increased. The impact of two regulatory requirements, EMIR and MIFID II, has seen the creation of significant challenges for back office teams, specifically in respect of the new data items to be reported. Within EMIR, challenges surrounding the reporting of ETD Unique Trade Identifiers to clearing repositories has fallen mainly on back offices, with the resultant amplified demand for change to cope with the increase in workload. Similarly, with MIFID II the number of reporting fields is increasing with a concurrent increase in workload for data management and back office teams.
ISC's experience and people, working together with our clients, have provided solutions and expertise to solve the regulatory challenges facing asset managers. With many regulatory frameworks the challenge for asset managers has been data. In ISC our clients have a partner with a deep specialism in the unique aspects of asset management data.
ISC is able to call on the internal experience built up by its consultants over many years both as consultants and market practitioners within the asset management industry. We have confronted, analysed and resolved these issues across multiple projects covering the regulatory framework within investment management. Our clients benefit from leveraging this experience and from the mature, pragmatic approach we take in partnering with them to help resolve their issues.
ISC Regulatory Capabilities