Aligning compliance with technological innovation

Steve Fice, Head of Operations, Global Transfer Agency (TA) discusses the wave of regulatory reform and its impact on an evolving TA sector.

What’s your focus for 2015?

Advances in technology continue to influence the transfer agency (TA) sector. There’s a growing demand for improved online solutions that permit investors to view, service and trade on their accounts in real-time from mobile devices on a 24/7 basis. We have seen significant interest over the last twelve months in our retail and distributor portals, and we expect this trend to continue. The portals facilitate user self-service, whilst providing third party administrators (TPAs) and fund managers with an enhanced service offering and a significant competitive advantage.

We are also seeing further demand for automated settlement and dealing. Clients are under constant pressure to improve efficiency and reduce risk, whilst managing costs. Increased use of STP is one mechanism for eliminating manual and time-consuming administrative processes and fund management companies are increasingly opting for full automation to include settlement across the transaction processing cycle.

How are regulations around the world affecting investor reporting? (What impact is regulation having on workload and costs?)

International regulatory initiatives such as FATCA continue to have a major impact on the TA industry and the software providers that support it. Systems and processes need constant updating and refreshing to keep up to date with the ever-changing legislation requirements.

The combined impact of global and local regulations, like the client asset (CASS) rules, impact providers by imposing ever increasing costs for compliance from market to market. This creates a more complex on-going administration and support burden. TA technology platforms must be flexible and able to address diverse requirements across multiple regions.

How are you upping your game to meet these requirements? (What operational changes are you implementing, can you enforce changes fast enough for the regulatory demands?)

For TPAs and fund managers, understanding the impact regulations will have on their business, investor base and the overhead required to support and implement these continue to be a priority. We discuss with clients how the regulations should be supported and the changes that need to be made to reflect their business and operating models.

As our solutions cover a wide range of geographies and different regulatory environments, the approach we have taken wherever possible is to cover the enhancements required on a syndicated basis across our client base. Clients have also been able to benefit from shared product management, regulatory tracking and business analysis skills across all our TA solutions.

What will harmonisation efforts such as T2S in Europe and the Asian fund passport initiatives do to the complexity of transfer agency? What will the business effects be?

As we have seen with UCITS IV, different countries and markets have their own nuances which provide barriers to harmonisation above and beyond funds regulation itself. Key to overcoming these challenges is technology that allows changes to be quickly made, especially when dealing with multiple domiciles, each with their own processing and settlement model.

Undoubtedly, anything that reduces the risk and the overnight funding is good for the market and makes it faster and more efficient. The migration to T+2 will increase the automation of operational processes across firms. Efficient, STP enabled technology platforms will offer real advantages as institutions revisit their current asset servicing business model.

How is transfer agency evolving to accommodate the changing business and regulatory environment? (Are there more players or fewer, higher costs? What adaptation have you had to undergo if any?)

Those financial institutions that can achieve the right balance between regulatory compliance and service innovation will be well placed to capitalise on growth opportunities. Crucial to success will be efficient and agile technology solutions that deliver real value and a long-term strategic advantage.

One of the key challenges facing the TA industry is the increasing data-driven demands from regulators, clients and investors. Fund managers and third-party administrators are turning to surround technology solutions to provide access to accurate, real-time data and management information reporting. Data warehouse solutions that break down isolated silos and consolidate data from multiple back-office systems are increasingly in demand.

Core TA platforms must also be able to support institutional and retail business for cross-border and domestic funds with the growing trend towards distribution platforms.

About the author

Steve Fice

Head of Operations, Global Transfer Agency

Based in our London office, Steve has more than 25 years’ software and financial services experience.

He is responsible for the continued delivery of Bravura’s transfer agency services to its international blue-chip client base.