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Regulatory Compliance

Regulatory Compliance

Explore our solutions for key regulatory requirements

Alternative Investment Fund Managers Directive (AIFMD)

The AIFMD is part of an increased push for investor protections that the European Union undertook just before the 2008 financial crisis. It was accelerated when the crisis exposed systematic risks to the EU economy. AIFMD places hedge funds, private equity, and other alternative investment firms into a regulated framework for disclosure and transparency to protect investors and set standards for marketing around raising private capital, remuneration policies, risk monitoring, and reporting, and overall accountability.

AIFMD is a complex, sometimes ambiguous rule with tight deadlines that poses a significant reporting burden for most managers. We help firms define rules, run compliance reviews, and produce in-depth, targeted reports in a streamlined, highly automated reporting environment to comply with AIFMD requirements.

FCA's Assessment of Value (AoV) Rule

AoV is the Financial Conduct Authority’s rule requiring management companies and independent non-executive directors (INEDs) to review and analyse funds to ensure they provide value. It mandates that firms assess value for each fund and that all fund boards must include at least two new independent INEDs. The objective of the rule is to provide greater scrutiny of costs and performance while adding an independent voice to the process to ensure that investor interests are being protected.

Beyond specifically requiring the review of net performance, the FCA gives no other insight on how to look at performance. This presents a challenge for firms looking to establish an AoV process. We help navigate the rule’s requirements and furnish efficient ongoing oversight through streamlined data collection, analysis, and reporting.

Basel III

As part of the Basel Committee on Banking Supervision's (BCBS) continuous effort to enhance the banking regulatory framework, Basel III improves the sector's ability to deal with financial stress through risk management and transparency. It is a comprehensive set of reform measures to promote stability by strengthening regulation, supervision, and risk management in the banking sector. Compliance with new Basel III standards began Jan 2013 and have been progressively phased in. New requirements cover regulatory capital and liquidity ratios.

We advance firms to a best-practice operation for Basel III by helping them efficiently and reliably monitor real-time intraday cash positions for actual, projected and historical balances, as well as make informed, effective and accurate funding decisions.

SEC Rule 613 - Consolidated Audit Trail (CAT)

With the Consolidated Audit Trail, the Securities and Exchange Commission aims to create a single, comprehensive database to track equity and option securities trading across U.S. markets. The primary goal is to improve the ability of the SEC and the Self-Regulatory Organisations (SROs) to oversee trading. The CAT will track orders throughout their life cycle and identify the broker-dealers handling them, thus allowing regulators to more efficiently track activity in eligible securities throughout the U.S. markets.

In the first phases of implementation, are challenged to submit a plan to create, implement, and maintain the CAT according to specific requirements. We combine industry knowledge and innovation to help firms discover new opportunities, avoid potential obstacles, and achieve future business efficiency and growth from their CAT implementation.

Central Securities Depositories Regulation (CSDR)

As part of the European Union’s regulatory reform in the aftermath of the financial crisis, CSDR supports the functioning and stability of EU financial markets by enhancing legal and operational conditions for cross-border settlement. It introduces the offering of omnibus and segregated accounts, the requirement to report internalised settlement, and the settlement discipline regime, under which market participants will be liable to pay penalties or charges against each transaction that fails.

CSDR carries clear implications for the broader securities industry in Europe and will mandate changes to a number of steps in the trade life cycle. Broadridge brings a higher level of efficiency, automation, accuracy, and control to post-trade and expense management to help firms meet CSDR obligations.

Dodd-Frank Wall Street Reform and Consumer Protection Act

Dodd-Frank is a massive piece of financial reform legislation targeting the sectors of the financial system that were believed to have caused the 2008 financial crisis, including banks, mortgage lenders, and credit rating agencies. It originally contained numerous provisions that were to be implemented over a period of several years, including the establishment of a number of new government agencies to oversee its components and subsequently many aspects of the financial system. However, Congress recently rolled back some restrictions in response to protests that the regulatory burdens it imposes could make United States firms less competitive. New requirements cover three key areas of an institution’s workflow: execution, clearing, and reporting.

European Market Infrastructure Regulation (EMIR)

EMIR aims to increases transparency across the over-the-counter (OTC) derivatives market to create a clear view of turnover, participants and market manipulation, as well as reduce the number of the counterparties involved and reduce the operational risk for market participants. In a quest to be more transparent and reduce risk, EMIR has introduced new obligations for derivative-trading companies, including reporting of all derivative contacts, mandatory centralised clearing of standardised OTC derivatives, risk mitigation techniques for non-centrally cleared derivatives, and enhanced collateral requirements.

Meeting EMIR requirements poses significant technical and regulatory challenges. We transform post-trade control and reporting with strategic solutions to reduce exposure to EMIR requirements and other reporting mandates.

Fundamental Review of the Trading Book (FRTB)

Designed to replace a series of patches introduced after the financial crisis, FRTB is a comprehensive suite of capital rules developed by the Basel Committee on Banking Supervision as part of Basel III. It is vast in scope and touches upon a number of complex but pivotal issues – from the design of the basic model used to measure risk to the process for deciding what sits in the banking and trading books. While Basel 2.5 was implemented in the immediate aftermath of the financial crisis as a stopgap measure to lift trading book capital requirements, the FRTB is primarily aimed at consolidating existing measures and reducing variability in capital levels across banks.

Compliance has the potential to increase cost of capital – in particular, to support trading activities – for banks with required infrastructure and workflow changes. Our award-winning risk management solutions support and automate the securities life cycle to help clients adapt to regulations like the FRTB.

G-20 Reporting

The regulatory directives from the Pittsburgh G-20 summit are meant to increase transparency and reduce counterparty risk around OTC derivatives, requiring that OTC derivative contracts are reported to a trade repository and cleared through a CCP. How each of the member states implements the regulation is dependent on the local regulator; some of these regulations are already live, and some are in progress.

Data and processing fragmentation has presented a challenge to G-20 reporting compliance. We take a strategic approach to reporting driven by expertise and innovation, helping our clients reap new benefits from mandatory trade reporting projects like meeting G-20 requirements.

Monetary Authority of Singapore (MAS)

The MAS is known to have some of the most comprehensive cybersecurity regulations in the world, including its national guidelines for cyberbanking in the world. Some MAS requirements include source code inventory and review, vetting of outsourced information technology and software, mobile security testing, vulnerability assessment, and routine information technology audits. Penalties for non-compliance with MAS requirements include fines, reputational damage, and revocation of license to operate in Singapore.

MAS compliance sets the standard for international cybersecurity, but it requires consistent, robust, and granular controls. We help our international clients with global solutions to improve control and spur business growth.

Markets in Financial Instruments Directive II (MiFID II)

A revamped version of the Markets in Financial Instruments Directive, the European Union’s MiFID II increases protection for investors and adds transparency to all asset classes, from equities and fixed income to exchange-traded funds (ETFs) and foreign exchange. One of the EU’s most extensive, pieces of legislation, MiFID II covers virtually every aspect of trading, requiring firms to report more trade information faster, including price and volume.

MiFID II compliance adds to the scale and complexity of regulatory requirements affecting firms operating in European jurisdictions. We help clients store and access historical data, and capture key information and trade life-cycle decision points, to comply with best execution and transaction reporting standards.

Securities Financing Transactions Regulation (SFTR)

SFTR is the European Union's response to the Financial Stability Board (FSB)'s policy proposals on securities lending and repos aiming to reduce perceived “shadow banking” risks in the securities financing markets. SFTR requires market participants to report details of their securities financing transactions (SFTs), including repurchase agreements (repos), securities lending, sell/buy-back transactions, and margin lending. Like EMIR for derivatives reporting, SFTR establishes that both parties to a trade need to report new, modified or terminated SFTs to a registered or recognised TR on a T+1 basis. It also offers the possibility for counterparties subject to the reporting obligation to delegate the reporting of these details.

This regulation represents a significant change to the securities financing world that will require firms to change their existing processes and overcome many potentially complex challenges. Our expertise in both securities finance and trade reporting regimes will enable clients to adapt to SFTR smoothly while minimising operational disruption and reducing the impact of compliance.

Shareholder Rights Directive II (SRD II)

SRD II is a European Union directive intended to strengthen shareholder positions and ensure that decisions are made for the long-term stability of a company. It amends the original SRD, which came into effect in 2007, with the objective of improving corporate governance in companies which have their registered office in an EU member state and whose securities are traded on the EU’s regulated markets. It clarifies definitions, standardises communication formats, and sets minimum data requirements and deadlines around shareholder identification, agenda distribution, and voting by intermediaries and vote confirmation.

Intermediaries need to act quickly to evolve existing processes into efficient methods of compliance. By extending our world-class global proxy management offering and award-winning blockchain-based shareholder disclosure management service, we are uniquely positioned to help intermediaries, both retail and institutional, meet their SRD obligations.

Across the globe, financial institutions large and small face increasing pressure from evolving regulatory requirements. We partner with our clients to help them not only meet requirements, but also turn compliance into an opportunity to enrich client engagement, optimise operations, and drive revenue growth. We provide accurate data and critical insights, tools to improve efficiency, and the highest levels of certified information security. Our unique perspective from the centre of the financial industry lets us see ahead to help our clients navigate a complex regulatory landscape and deliver efficient, reliable and cost-effective ways to meet requirements and get ready for what’s next.

Steering Committee Members

Thomas Broderick
State Street Corporation
Custodial Bank
Lawrence Conover
National Financial Services LLC
Broker-Dealer
Steven Dapcic
Pershing LLC
Broker-Dealer
Michael Garland
The New York City Comptrollers’ Office
Institutional Investor
Stacey K. Geer
Primerica Inc.
Corporate Issuer
Philip Larrieu
California State Teachers’ Retirement System
Institutional Investor
Gloria Lio
Bank of New York Mellon
Custodial Bank
Mark S. Lyon
Synchrony Financial
Corporate Issuer
Michael Marino
Credit Suisse
Custodial Bank
James Monahan
Morgan Stanley & Co. Inc.
Broker-Dealer
Stephen Norman
S.P. Norman & Company, LLC
Committee Chair
William J. O'Shaughnessy
Quest Diagnostics Inc.
Corporate Issuer
Valiere Simpson
TD Ameritrade
Broker-Dealer
Chad Spitler
CamberView Partners
Corporate Issuer
Joseph C. Swanson
The NorthernTrust
Corporation
Custodial Bank
Photo: Telecom sales rep meets with a new customer, demonstrating electronic communications capabilities Photo: Telecom sales rep meets with a new customer, demonstrating electronic communications capabilities

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