PERSISTENT AND GROWING CHALLENGES FOR REGULATORY AND INVESTOR REPORTING THAT ASSET MANAGERS FACE TODAY
In the wake of the global financial crisis, a few countries have made some efforts at deregulation. However, by and large, both the number and complexity of regulations, and the associated reporting requirements for asset managers continue to mushroom globally. For example, in the US, the mutual fund industry was only able to elicit several postponements in N-PORT reporting as part of the Investment Reporting Modernisation Act. Starting in April 2019, mutual funds and certain exchange-traded funds (ETFs) must begin to file their N-PORT report with the US Securities and Exchange Commission (SEC).
Another example of a new regulation that is piling on top of the existing regulatory reporting required for some asset managers is the Packaged Retail and Insurance-based Investment Products Regulation (PRIIP). This new standardised regulatory disclosure requirement aims to increase the transparency and comparability of investment products for retail investors. In addition, a large number of asset managers have been forced by their investors to either begin or to do more in-depth environmental, social and governance (ESG) compliance reporting.
Why persistent operational challenges remain
Given that both the breadth and depth of required regulatory reporting and investor disclosures continues to increase unabatedly, why is it that most asset managers are still so ill equipped to deal with their ongoing reporting? We have found that deficiencies in infrastructure, operations and subject-matter expertise have hampered asset managers in their ability to have to sound, complete and cost-effective regulatory and investor reporting.
Jan-Mar 2019 Issue
Global Risk Management Advisors (GRMA)