This is a sponsored post by Carnegie fundservices. Read more from their Expert Insights eMagazine, in collaboration with IM|Power and FundForum.
In 2017, the openfunds association was founded in Switzerland at the initiative of banks and fund industry professionals, with the stated objective of establishing a common standard for characterizing fund data. Five years later, the association has dozens of active and inactive members and comprises the finest names in global asset management. Openfunds has become the international standard for organizing and exchanging fund data. The swift success of openfunds illustrates the need for recognized standards on the one hand, and the power of a collaborative approach on the other.
The reason why the need is so great is that the fund world has been undergoing profound changes in its operating processes over the past few years, heading towards increased computerization and automation. The trend is now inevitable, one reason being because the industry was lagging quite a long way behind in this area.
We are witnessing a groundswell as all asset-management functions, and in particular fund distribution, are being revolutionized by the introduction of solutions based on new technologies.
Apart from representing funds, Carnegie fundservices (CFS) has specialized in support services for its clients in the area of fund distribution. Our added value is to contribute to the market more than fifteen years’ experience and IT solutions that enable us to automate entire areas of the business. Here, we describe some very topical examples; these IT solutions were programmed entirely in-house, in Geneva, by our team, who in their daily work are firmly committed to diversity but also to social and environmental responsibility.
fundeyeTM
The existence of a standard enables technological solutions to be deployed because it ensures a common language between the different users of the information. Thus, the information will be accepted as it is and be able to be processed expediently by all. But one prerequisite is to have tools that can efficiently collect, organize and disseminate fund data on a global scale. fundeyeTM is a platform that has been developed and equipped to do this. We collect data by automated means from dozens of primary sources (mainly fund administrators) and are able to organize and deliver it in various forms (data that meets different standards, documents or on-site consultation) to any recipient (private individual, institution or platform) in 59 countries. Thanks to fundeyeTM, our clients can benefit from a significant simplification of their internal processes, thereby cutting their costs.
Upstream, we help our clients to organize the information and populate the more than 1,000 data points per ISIN of the openfunds standard. We also help them to keep their data up to date, particularly when new needs emerge. A recent example is the introduction in March 2021 of the Sustainable Finance Disclosure Regulation (SFDR) in the EU, which imposes additional transparency obligations on market participants with regard to sustainability. This has resulted in the addition of a number of fields, so we have adapted fundeyeTM accordingly.
Due Diligence Hub
Conducting due diligence on fund distributors (also known as KYD) has become absolutely essential due to rapidly-changing regulatory practices in the two main fund domiciliation centres in Europe: Luxembourg and Ireland. Consequently, fund “buyers” and their service providers – be they banks, wealth managers or platforms – are facing increasing demands. The questions asked are becoming more numerous and intrusive, and the lack of uniform practices makes the exercise extremely tedious for those with many funds in their portfolio. As for the fund managers who initiate these KYDs, they have to cope with tighter regulation and must devote more and more resources to the exercise.
A useful contribution was made recently by two professional organizations: the Investment Company Institute (ICI) in the United States and the European Asset Management Association in Europe. These two bodies have developed, in symbiosis with the industry, a standardized questionnaire to facilitate KYD, thus opening the door to global technological solutions. It is interesting to note that a standard existed already in Switzerland, thanks to the efforts of AMAS, but here we are witnessing a change in geographical scale.
On the strength of 18 years of practising KYD, Carnegie fundservices created the Due Diligence Hub in 2020, a web-based platform that allows the various actors (fund managers, fund management companies, fund distributors and wealth managers) to exchange relevant information quickly and efficiently. This is done in the form of pre-established files with a standardized composition, in a secure and controlled environment that ensures the necessary confidentiality. Standardization of the files makes them easier to interpret and speeds up their production. Combining the questionnaires laid down by the industry’s umbrella organizations with our experience of the KYD ensures that the platform’s content complies with the latest best practice, and thus meets the needs of the various actors.
The entity targeted by KYD forms a single file, which is then shared with the multiple fund management companies that need to conduct due diligence. Fund management companies who need to initiate due diligence on multiple targets for compliance reasons can rely on a single information provider. The Due Diligence hub enables them to make document collection very efficient, relieving them of many bilateral requests and months of requests and follow-up.
These two examples illustrate the fact that activities regarded as impossible to automate not so long ago can quickly evolve, as technology allows for substantial gains in efficiency and resource savings.
Find out more about Carnegie fundservices at this year's FundForum International, returning to the Grimaldi Forum in Monaco, 20 - 22 October 2021.