Crucial Components Every Investment Firm Needs to Conquer Regulatory Reporting

In the intricate world of financial filings required by regulatory bodies like the SEC and the US Dept. of Treasury for US-based investments, Markets in Financial Instruments Directive (MIFID II) in Europe, and Singapore’s Monetary Authority (MAS), the process can often resemble a maze. Data is trapped in silos across different functions and managed manually. Not only does this lead to inefficiencies but it also raises critical questions about oversight and transparency – across the process and the data that is used to complete the report.

Outsourcing leads to opacity

What happens when regulatory reporting responsibility falls to third parties, like fund administrators? Outsourcing regulatory filings is a costly and opaque process that leaves stakeholders in the dark. This is a common practice among many investment firms who have chosen to contract out some or all their regulatory filings to the more capable hands of third parties who either specialize in the service, much like an accountant for filing someone’s taxes, or they offer it as a supplementary service to their core fund administration activities. While relieving firms of regulatory filing worries, third parties complete and file on your firm’s behalf. Firms are not involved in the data gathering process, nor do they have the means to analyze and verify the data prior to submission – for instance is the stated AUM accurate? Where was the number sourced? How was it calculated? Questions like these and many more highlight the need for transparency and oversight.

Regulatory reporting reimagined

Picture a system where the oversight of data, processes, and the progress of filings is streamlined and transparent. Such a system would revolutionize how organizations manage their filings, moving away from the clunky, manual methods that have long dominated the industry. Traditional approaches lack the necessary visibility, making it difficult to track the lineage of data values populated in filing fields. With no clear source or record of changes, the process can become a black box.

This is where modern solutions that prioritize data integration with built-in data quality and validation come in. Innovative seamless integration with existing investment data systems is a game-changer. By leveraging existing data, organizations can automate the completion of forms, significantly reducing the time and resources traditionally spent on manual entry. This integration also streamlines notifications, prompting individuals to review and approve forms efficiently. The result? A more agile and responsive filing process.

Intuitive and comprehensive

Moreover, an interface designed to mirror and represent actual filing forms provides compliance, ensuring the exact required information is collated. Self-service ability, enabled by granular permissions and authentication controls allows authorized users to view and override data in fields as needed. This flexibility ensures that inaccuracies can be swiftly corrected without disrupting the entire filing process. But it doesn’t stop there; the ability to view the lineage of each data value not only enhances accountability but also instills trust among stakeholders. Capability to export form responses in a regulator-approved format stands out as a needed feature. This ensures compliance and readiness for submission to regulators, eliminating the last-minute scrambles that often accompany manual processes.

Scaling for business growth

For firms launching a new fund, entering a new asset class, or offering something new altogether, regulatory reporting, as well as operational processes, for that initiative or new business line needs to be considered, incorporated into current workflows, and completed within the required timeframe. New funds and products may result in not only additional filings on an existing form, but an entirely new form. A regulatory reporting solution that supports these filings out of the box enables firms to easily scale as their business grows by the introduction of new funds or instruments. One that integrates with a firm’s current investment operations systems leverages fund and investment reference data via integration, drastically reducing manual efforts. 

What’s even better? If the firm’s operational investment system integrates with a regulatory reporting solution seamlessly, out of the box. Arcesium’s operational platform, Opterra, which manages and processes investment transactions, positions, and accounting P&L, and more, offers a regulatory reporting solution to extend the investment operations lifecycle processes and workflows. This solution supports regulatory filing requirements while maximizing the value of firms’ existing investment and accounting data. By using the same single source of truth data for multiple purposes firms optimize efficiency and increase accuracy and timeliness of their required filings.

Essential components for regulatory reporting

So, what does a fully fledged, modern, and advanced regulatory reporting solution look like? Let’s summarize.

Seamless integration

• Integrates with existing investment data systems and leverages already present data, automating the completion of filing forms and reducing the need for manual data entry, which minimizes errors and saves time.

Data quality and validation tools

• Helps in identifying errors, inconsistencies, and missing information before submission, enhancing the reliability of the data entered in filings.

User-friendly interface

• Designed to resemble actual filing forms can significantly improve user experience. Familiarity reduces onboarding and increases efficiency, allowing users to complete forms quickly.

Data lineage tracking

• Enabling teams and individuals to view the lineage of a data value populated in a filing field — including its source and any changes made — enhances accountability and trust in the data being submitted.

Override capabilities

• The capability to override data in filing form fields allows users to make necessary adjustments based on real-time insights or changes in circumstances.

Notification system

• Alerts individuals when forms are ready for review and approval, helps maintain compliance timelines, and ensures that all necessary stakeholders are involved in the approval process.

Export functionality

• Exporting form responses in a regulator-approved format is essential to ensuring submissions are compliant with regulatory standards.

Conclusion

Today, we reside in a world where data is the lifeblood of decision-making. A shift towards automated, transparent, and integrated regulatory reporting systems is fundamental. As organizations embrace these advancements, they will not only reduce costs but also gain the oversight necessary to traverse the complex regulatory environment with confidence.

The future of financial filings is bright, driven by technology that empowers organizations to take control of their data and processes. The days of opaque, costly, and siloed regulatory reporting and investment operations are numbered, making way for a new era of transparency and efficiency.