Todd Moyer, EVP of global business development, Confluence
Since the economic crisis, regulators have shifted their focus to identifying and managing systemic risk.
In fact, many recent regulations — N-MFP, Money Market Stress Testing, CPO-PQR, Form PF, AIFMD and from 2015 the SEC’s investment company modernization proposal — are designed to give regulators deeper visibility in this area.
Regulators have also placed greater emphasis on ensuring firms better understand and manage their own liquidity risk. In 2016, we do not foresee regulation slowing down.
The SEC’s investment company reporting modernization proposal is expected to be finalized early this year and will immediately impact 9,000 advisors to separately managed accounts and 13,000 mutual funds.
In Europe, EMIR, MiFID 2 and Solvency II will also create new regulatory reporting burdens.
Achieving the level of transparency that regulators are now calling for requires an extensive investment of asset managers’ time and money, and we expect these costs to continue rising throughout the year.
We expect regulators will begin incorporating data analysis into their examination process, which will change the way firms will need to prepare.
They will need to run their own mock data analyses and be able to anticipate questions regulators will likely ask so that they can provide quick and effective responses.
In order to better manage regulatory demands in 2016, managers will continue to push solution providers to consolidate data management and reporting capabilities into a single platform.
It is important to note that increased reporting burdens aren’t just coming from regulators.
Asset managers are also feeling increased pressure from institutional investors, who are taking a more significant role in the push to standardize back-office reporting processes in the asset management industry.
That pressure is just as likely to drive changes in the way the industry manages data during the next year.