MiFID II, the European regulatory framework designed to improve the transparency and oversight of financial markets, is moving responsibility to understand the distribution chain from distributors and platform providers to fund managers. This means that for the first time fund managers will be required to have full transparency into where their products are being sold. This shift in responsibility represents an enormous challenge.
Historically, fund managers had neither the necessity, nor ability, to assess where funds were held across their global distribution channels and markets. Tackling this task poses considerable data processing challenges. Fund managers would need to aggregate information across thousands of sources provided to them in any number of different data formats, in addition to creating tools to analyse the data and generate reports. This represents considerable cost and resource to an industry that is already under significant pricing and performance pressure.
Calastone’s Data Services solution is unique in its ability to collate bottom-up transactional data across the global distribution chain to create a detailed and accurate look-through at both market and individual firm levels. Leveraging its expertise in providing financial technology solutions to connect the funds industry, Calastone has worked closely with clients to bring this information together and address business and regulatory changes, including MiFID II. For the first time, clients will benefit from a whole of market solution enabling them to understand their global distribution down to the end distributor, providing powerful distribution insights and addressing regulatory obligations.
Rob Swan, Managing Director – Data Services said, “Many fund management firms are not prepared for the scope and volume of work required to simply achieve look-through of their product distribution, a task that involves the consolidation of data across thousands of administrators, distributors and advisors. We anticipate that aspects of the upcoming MiFID II regulation will require fund managers to add a market overlay to monitor the full distribution chain effectively. The scale of this task should not be underestimated. The recent one-year delay of the regulation must not be seen as an opportunity to defer the project, but rather as time to ensure compliance with their regulatory obligations.”
Commenting on the launch, Jon Willis, Chief Commercial Officer, said, “Calastone’s heritage has been founded in supporting the funds industry by driving greater efficiency through automation. As with all our developments and initiatives, we work closely with the industry to identify ways to help them address their challenges and have been delighted with the early interest in our Data Services solution. We welcome all initiatives to create greater transparency across the industry and are proud to play our part in helping our clients benefit from unique insights into their distribution chain that will ultimately lead to operational efficiency.”