Confluence Survey Reveals Operational Impact of the SEC’s Reporting Modernization Rule Proposal

Confluence, a global leader in investment data management automation for regulatory, financial and investor reporting, today announced the results of a client survey assessing the top operational challenges associated with the Securities and Exchange Commission’s (SEC) Investment Company Reporting Modernization Proposal.

“The SEC’s new rule proposal has major implications for the asset management industry”

In May, the SEC introduced two proposals calling for mutual funds and separately managed accounts to provide greater transparency and increased risk reporting. The goal of the proposals is to fill a gap in the SEC’s data for those two investment vehicles, a necessary prerequisite to evaluate and control systemic risk as required by Dodd Frank. Public comment on the proposals closed on August 11.

Confluence polled 97 asset management professionals to better understand client concerns with Form N-PORT, the most impactful of the four main provisions of the mutual fund proposal. The survey was conducted as part of a webinar hosted by Confluence to provide clients with background on the proposal and information on how Confluence will help the market prepare for and execute the new filing.

According to the survey results, asset servicing firms are overwhelmingly concerned with multiple aspects of the SEC’s proposal, including:

  • Sourcing and collecting data in a timely manner to comply with the rule
  • How to aggregate data from multiple new sources and reconcile it for multiple filings
  • The costs associated with complying with the reporting requirement
  • The reduced reporting window (to 30 days, down from 60 days)

In terms of data collection, 26 percent said identifying sources for the required data was the primary concern, while 56 percent said collecting it would be the biggest challenge.

Once the data has been collected, 47 percent said aggregating it would be the biggest data management challenge, while 33 percent said reconciling it between its multiple uses was their top concern.

An overwhelming majority of survey respondents (93 percent) said they are concerned with meeting the proposed 30-day Form N-PORT reporting deadline. Additionally, three out of five respondents (59 percent) said they are unprepared to provide the risk metrics required by Form N-PORT, and the majority of that group also said their firm doesn’t yet have a plan in place.

“The SEC’s new rule proposal has major implications for the asset management industry,” said Paul Soltis, Market Manager for North America at Confluence. “Given regulators’ post crisis shift to managing systemic risk, it’s not surprising that firms are beginning to feel the pressure. Investment managers and fund company administrators will need to manage a much larger data set and report more frequently, which could add significant manual hours of data collection, aggregation, report creation and content confirmation to meet the new filing requirements. Confluence is developing a solution to meet this new challenge, and these survey results will inform our approach to ensure our focus stays on what is critical to the market.”

About the 2015 Confluence Client Survey

Confluence conducted a survey of its clients as part of the registration process for a recent webinar, addressing processes for responding to the SEC’s Enhanced Data Reporting Proposal. The survey was conducted between July 22, 2015 and August 5, 2015. A total of 97 asset management professionals participated in the survey, providing insight to perceptions and attitudes towards recent regulatory mandates, and reflecting what the overall industry believes to be the greatest challenges around managing data to best address new reporting requirements.

About Confluence

As a global leader in data-driven solutions for efficiency and control, the asset management industry has relied on Confluence to solve the industry’s toughest data management, automation and regulatory challenges for managed investments for more than 20 years.

Innovative and scalable, the Confluence unified platform enables asset managers to consolidate and leverage data across business operations. Confluence solutions support a wide array of fund types – including UCITS, U.S. ’40 ACT mutual funds, and contemporary fund structures such as ETFs. In addition, as a leading AIFMD, Form PF and Form CPO-PQR reporting provider in the alternative investment industry, Confluence has been solving the data integration and data reporting problems of hedge funds and fund managers for more than a decade.

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