Regulatory Reporting

The issue of regulatory reporting has become an increasingly important challenge for all asset managers in recent years.

If in the 1980s and 1990s the requirements from regulatory reporting often reflected in the chart of accounts of an asset manager, the requirement for regulatory and, above all, customer reporting was increased so strongly that central databases were built as a data basis for the reporting.

In the meantime, the reporting requirements, in particular the regulators, have become so complex that data requirements of the reports completely affect all areas of the value chain of an asset manager. Be it Solvency II, IFRS 9, which is by no means just an accounting approach, MIFID and many other regulatory initiatives.

In addition, the reporting requirements of customers and market participants require data from many, if not all, areas of the value chain, and thus include transaction data, risk management and control data, processing and accounting, as well as tax data.

This means that the technical data basis for reporting – the databases built 15 or 10 years ago and repeatedly revised over the years – had to be complemented and provided with logic and in the meantime are correspondingly complex and inefficient. Many asset managers are working to overhaul or rebuild the databases in order to meet the complex requirements of various reports in the required quality as well as the required time windows.

In the meantime, the reporting requirements, especially by the regulatory authorities, are becoming even more complex and completely impact on other asset managers through the company to be reported, who are not required by the regulators as a company itself, but who have to provide this data in the context of customer reporting. In the meantime, the reporting has become a further key element in addition to the performance of the investments in order to maintain customer relationships.

The prevailing approach of enforcement in accounting, mainly driven by IFRS, has now also been implemented in reporting, and figures are being demanded at the level of positions in individual investment vehicles, which is primarily a challenge to the data basis for reporting, since a wide variety of data sources need to be merged together as a data basis for reporting.

Let’s take the required Solvency II reporting for European insurers as an example. Solvency II applies not only to the insurance companies themselves. Capital management companies are also strongly affected, since they partially administer funds from insurance companies or because insurance companies invest in mutual funds. But also investment boutiques, which are highly specialised in alternative investments, private equity and infrastructure investments, are affected by Solvency II data requested by the investing insurers.

Ultimately, regional reporting requirements are relevant internationally for all asset managers through the approach of enforcement – key words consolidated financial statements, but also corporate reporting. Also in this case, regional regulatory reporting takes the form of requested customer reporting by asset managers, who operate their business regionally or outside the regulatory scope under corporate law.

As asset managers are increasingly intertwined internationally, data from international participations and from subsidiaries or partners worldwide (keyword outsourced asset management for specific regional markets or specialised products) must be implemented internationally for regional reporting requirements.

If we divide reporting into

• internal reporting,
• external reporting as well as
• regulatory reporting,

Anadeo can here refer to a huge number of successfully implemented projects in all these areas.