Mutual fund and ETF Managers have faced a barrage of new regulatory reforms during the last few years, particularly since the passage of the Dodd-Frank Act in July 2010. Recent election results have brought the proposed Volcker Rule back into the conversation and signaled that Dodd-Frank is here to stay. Despite these rapidly evolving regulatory requirements, one critical fact has remained consistent for managers of the thousands of active mutual funds in the market: new technology is key to ensuring full compliance and achieving full-circle transparency with investors.
Fund managers must embrace technology to help them meet new regulatory demands and achieve and maintain required levels of transparency. To ensure full compliance, managers would do well to approach their technology initiatives according to three distinct areas, each of importance to managers and investors alike. First, develop rules in legacy systems to prevent prohibited trades. This is especially necessary in the current environment of easy money and increased market liquidity, due to central bank activity.