Investment Policy Compliance:An Untapped Resource
Bradley ShrumAccount Manager, Investment Management
Agenda
• Challenges in Investment Compliance Monitoring (ICM)
• Current processes and associated risks
• Industry Best Practices
• Optimizing ICM
Clarissa’s Challenges
• Limited resources
• Data integrity and consistency
• Need to monitor regulatory requirements
• Audit requirements
0% utilize ICM system to monitor increasing Regulatory requirements
53% don’t maintain data dictionary to match ICM system to other sources
21% have never done an assessment
58% performed at least 1 data quality assessment but not regularly
53% don’t feel the organization effectively manages potential data divergences
55% don’t think organization is sufficiently staffed to meet ICM requirements
Clarissa is not alone
Data from: Deloitte 2016 Global Investment Compliance Monitoring (ICM) Survey of 20 organizations
Clarissa is not alone
55% don’t think organization is sufficiently staffed to meet ICM requirements
53% don’t feel the organization effectively manages potential data divergences
58% performed at least 1 data quality assessment but not regularly
21% have never done an assessment
53% don’t maintain data dictionary to match ICM system to other sources
0% utilize ICM system to monitor increasing regulatory requirements
Clarissa’s Current Processes
• Manual Processes
» Time consuming = monthly or quarterly
» High risk for error
» Lack of process control
» Workarounds (i.e. macros, etc.) can break
» Key-personnel risk
• Legacy Systems
» Initial coding issues flow downstream
» Audit concerns over independent results
• Multiple External Systems
» Differing results
» Built for compliance monitoring
Best Practices - Automation
» More scalable
» Lower error potential
» More frequent and timely testing/reporting
Best Practices – Daily Monitoring
• Quickly identify issues
• Proactive approach
• Hard to support manually
Best Practices – Independence
• Additional checks
• Avoid conflicts of interest
• Identify Rule discrepancies
Best Practices - Agility
• Respond quickly to changes
• Reduce programming/system dependence
• Audit trails
Best Practices – Controls/Audit Reporting
• Automated systems = quick response
• Permission controls
• Reporting on changes/notes
Technology Can….
• Automate monitoring
» Reconciles daily transactions and positions from clients and custody
» Aggregate data across all portfolios
» Utilize client provided data and custom fields
Technology Can….
• Provide piece of mind on data
» Regularly assess data quality and challenge inconsistencies
» Independent third-party data
Technology Can….
• Give you accurate and up-to-date compliance status
» Run rules against portfolios daily
» Warning limits can be set
» Provide email notification on violations
Technology Can….
• Provide power to the user
» Investigate violations down to the individual security
» Allows clients/users to update limits
• Limited permissions
» Input notes and resolutions
Technology Can….
• Provide full audit support
» Track full change history
» History by date and rule
» Single source/process
What to Take Away
• Challenges» Resources, Data, Regulation, Audit
• Potential Issues
» Manual processes, legacy systems, multiple systems
• Best Practices
» Automate daily, maintain data and independence, mind controls/audit
• Technology = Solutions
• Take the post-session surveys in the Clearwater Events app and scan out as you exit.
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• Resources: Click the icon within the Clearwater platform to access the Client Help Portal, a resource for user guides, product release notes, helpful tips, and more!
Reminders