In today’s world, the marriage of Finance and Technology teams was inevitable. However, as in all relationships, it’s easy for small miscommunications between the two parties to cause big issues. I’ve seen many examples of this to varying degrees in my four short years in this industry. I couldn’t begin to count the number of times I’ve gone to our tech team with a request but it ends up requiring an iterative process whereby the tech team delivers what they thought I was requesting, only to have me clarify some point which requires them to make changes. An iterative process isn’t a bad thing – anything that gets us to our goal is a win. However, I’ve learned that with a little bit of extra time and effort in the beginning, there is a concrete way to make the process more efficient and painless for everyone involved. 

The tool that IMP has found to be invaluable for bridging the gap between Finance and Technology teams is a Data Dictionary. In a perfect world, you’d have a team with an in-depth knowledge of both the financial and technical side of things, but those people are rare gems. Data Dictionaries are the next best thing. A good Data Dictionary should hold information on all the important terms, tools, tables, security types, regulations, etc. that are important to a firm’s operations. Having all that information in one place makes it easy for someone to find relevant information they need to fulfill a request. We’ve found that the development process goes much more smoothly when the ability to access contextual information about a term, tool, or process is readily available. 

As an added bonus, Data Dictionaries are invaluable to people who are new to your firm. Even the most senior people will have questions when they make the move from one firm to another. The fact that a single term can have different nuances or definitions at different companies necessitates a good Data Dictionary that spells out exactly what a term means at your own firm. Data Dictionaries also help increase the efficiency of junior team members. Instead of having to ask a bunch of questions or dig through a shared drive or old emails, they can simply reference the Data Dictionary when they need more information. 

IMP’s CLEAR Compliance® has a Data Dictionary tool that we rely on heavily, and it has the benefit of linking dictionary entries directly to a business requirement. That way, anyone looking at that requirement can open the dictionary entry with one click and see more in-depth explanations. This has proven to be extremely useful, especially considering that each client we work with has their own processes, custom tools, and even definitions of industry terminology. To take it one step further, a client of ours could define a term differently depending on which of their clients it is applied to. The CLEAR Compliance® Data Dictionary allows us to define all those nuances for each client and link those entries to any relevant requirements, portfolios, and test cases.

So how do you build out a good Data Dictionary? It won’t happen overnight. Our team has found that the best process for building out a Data Dictionary starts with our questions. Any time we come across a term, tool, or process that is complex or difficult to understand, we input a placeholder entry into the Data Dictionary. We then have our subject matter experts go in and fill in what information they can. Any remaining client-specific questions then get sent to the client for clarification. This way, no single person has to shoulder the huge responsibility of creating a thorough Data Dictionary on their own.

The gap between Finance and Tech teams is not an insurmountable one. With some extra time and effort up front to build a Data Dictionary, firms can prevent a lot of waste and rework. This will not only increase the efficiency of the process, it will also facilitate the learning and growth of your team members. 

The Securities and Exchange Commission (SEC) has recently released new or updated rules related to three key areas for asset managers: short positions, securities lending, and beneficial ownership. All three final rules were issued in October of this year with effective dates of early 2024.

On September 26th, the Securities and Exchange Commission (SEC) fined DWS Investment Management Americas Inc. (DIMA), a subsidiary of Deutsche Bank, for making misleading statements regarding its Environmental, Social, and Governance (ESG) investment process. DIMA, which marketed itself as a leader in ESG investing, failed to adequately implement its global ESG integration policy from August 2018 to late 2021, contrary to what it led clients and investors to believe. As a result, DIMA has agreed to settle this with a $19 million penalty payout. 

Trade settlement cycles will be transitioning from T+2 to T+1 in April 2024, aiming to promote market efficiency, strengthen investor protection and reduce counterparty and market risk. However, this change will present obstacles for Non-US ETF’s.   

For over four decades, the London Interbank Offered Rate (LIBOR) rate has influenced various parts of the finance industry, used as the key point of reference for financial instruments, such as future contracts, the U.S. dollar, interest rate swaps, and variable rate mortgages.

In 2022, the SEC filed 760 enforcement actions, which was up 9% from 2021. They imposed a record-breaking $6.44 billion in monetary penalties, up 67% from 2021. These drastic increases are a result of the SEC ramping up enforcement efforts, charging steep penalties, and rewarding large sums to whistleblowers. As we all know, the consequences of compliance failures extend further than monetary penalties. These events can take a toll on your firm’s reputation and undermine employee morale.  

On August 23rd, the Securities and Exchange Commission (SEC) approved new rules aimed at improving the operations of private fund advisers and updating compliance regulations for investment advisers. Despite facing some resistance from firms, the SEC has asserted that these rules offer several benefits to investors when implemented.  

In 2023, Artificial Intelligence is transforming the way we conduct business around the world.  As new technology emerges in the financial services industry, many professionals in the investment industry are wondering how this may change Compliance and Regulatory Technology.  While we may not know exactly what these changes will look like, we can make sure we are prepared and updated on changes in technology.

If you are planning an OMS conversion next year, you’ll likely be working on the budget this fall. And, unless you have firm’s requirements right, that budget will only cover about 50% of your project.