The client offers fully automated all-in-one compliance platform for the global investments industry. They serve financial services providers with automated compliance solutions that enable regulatory protection, reduced risks, and brings down the operating costs. They aim to deliver thorough, unparalleled expertise in risk and compliance experiences to their clients.
Need for a system that improves effectiveness and speed of non-compliance detection to streamline portfolio compliance processes
With financial regulators gearing up to go further than ever to ramp up heavy penalties as punishments for financial misconduct, tackling financial crime and compliance has obviously become the key priority for compliance officials worldwide. The client wanted an integrated, end-to-end solution designed to meet portfolio-wide compliance needs. A portfolio typically comprises of a group of financial assets such as stocks, bonds, mutual funds, exchanged-traded funds, closed end funds.
The client noticed that their patrons urgently needed a portfolio compliance solution that would help investors and financial professionals align portfolio objectives with regulatory mandates. Client noticed that their then-existing processes and infrastructure were struggling to effectively support intensifying regulatory mandates which ultimately resulted compromised compliance and increased associated operational costs.
The client deliberated their need for the solution and diagnosed crucial requirements that existing processes struggled to meet. Meeting those requirements could help client and their patrons set an unmediated path towards achieving a streamlined portfolio compliance :
- Need to improve effectiveness: The client wanted a solution that could improve the effectiveness of controls and detection techniques for investment portfolios of their clients. The system needed to be dynamic and speedy at discovering non-compliance as per the regulatory mandates.
- Need to manage costs: The client wanted the solution to optimally manage the costs of supporting while ensuring operational efficiency with increased user productivity. Direct costs surged as ensuring compliance for large investment portfolios meant expanding compliance teams.
The client wanted a smart, comprehensive solution that made portfolio compliance easier to manage. The organization wanted the solution to ensure that the reference data is comprehensive and cover investment amount, ratios of financial investments, and other corporate information about various securities and holding that collectively contribute to a portfolio.
A comprehensive platform for surveillance, detection, and reporting non-compliance
As the client’s technology advisor, we delivered a Portfolio Compliance System that is robust, easy-to-use, scalable, and dynamic at reduced costs. The platform automatically tests and flags exceptions to the defined portfolio compliance guidelines.
For example, a compliance officer sets guidelines on composition of various security types within a portfolio with a defined percentage range for each component, for instance, if the amount of fixed income securities or equity within the portfolio is above or below a defined range, the system will automatically flag and report violation.
The solution provides a powerful platform to cater core functionalities that are critical to achieving compliant portfolios. The solution helped client :
- Enable highly effective, hassle-free processes: The solution works on a defined set of rules and regulations that are defined by the compliance team of the portfolio management company. For instance, if compliance officer has defined a rule that mutual funds should be between 5% and 10% of the entire portfolio, the solution will ensure that total mutual funds invested within the portfolio must be between the defined limits. In other case, the solution creates violation and notifies the compliance officer who can further take necessary action to ensure compliance. A compliance team can set up multiple combinations of rules to keep an investment portfolio compliant.
- Enable accurate compliance reporting through a single, unified platform: The solution enables users with a visually appealing reporting and analytics platform that assists users with detailed snapshots in a glance. The robust system enforces policies (example, prevent transactions that fall outside of risk-defined rules), provide automated monitoring and analytics to detect potentially suspicious investments.
Compliance can be set up as per security attributes tests, ERISA, IRS, SEC, federal securities laws, securities allowed/not allowed, prohibited transactions with affiliates, leverage allowance, short positions and more. As laws and regulatory mandates change, the solution anticipates the dynamic environment of portfolio compliance and is designed to be flexible, easy to use and configure. The easy configurability of the solution coupled with smart business logic accelerated the speed of their operations.