Five Regulations: One Exchange
Silverfinch supports your response to a number of regulatory requirements. Originally designed to assist with Solvency II reporting we are rolling out support for more regulations to meet the specific regulatory needs of our clients. Our asset manager clients, distributing in Europe, will use the platform for their Solvency II, VAG, GroMiKV, PRIIPs and MiFID II needs, cutting costs and improving reliability through a single data management system.
A Strategic Solution to European Regulatory Reporting
The regulatory regime for both sectors is becoming increasingly demanding. However, with these demands come opportunities to leverage the increasingly standardised regulatory framework offered by Silverfinch to reduce costs, improve efficiency and win business across Europe.
In January 2018 the MiFID II regime will come into force, and with it a new set of challenges for firms across the breadth of the investment management and distribution landscape. MiFID II raises specific challenges in terms of data exchange between various market participants. Without a platform to intermediate data exchange, complex N-to-N data exchange will permeate the market and drive inefficiency in an area already fraught with complexity and scalability challenges. The three specific areas in MiFID II that Silverfinch will provide solutions for are product governance, cost and charges and Know-Your-Distributor.
By 31 December 2017, Packaged Retail Investment and Insurance Products (PRIIPs) manufacturers will be required to produce Key Information Documents (KIDs) that will provide retail investors with information about the features, risks, and costs of investment products. Distribution channels and intermediaries will also have responsibility for delivering the KID to the investor.
The KID, a standardised pre-contractual disclosure document, applies to investment products marketed to retail investors such as investment funds, life insurance policies with an investment element, retail structured securities and structured term deposits. UCITS are exempt from the new KID requirements for a transitional period of 3 years. Providers of funds that are wrapped by insurance-based investment product will, therefore, be required to provide some of the data needed by their insurer clients to produce the KID.
KID Data Distribution
Silverfinch is leveraging its position as the leading look-through and data distribution platform for client regulatory reporting to assist asset managers in achieving the most efficient distribution of the KID data to insurance-based investment product manufacturers.
Silverfinch is now expanding its data model to include the KID data for PRIIPs enabling asset managers to tap into its existing data distribution capability with extensive coverage of the European insurance industry.
Solvency II, a Europe-wide regulation for insurers, has a huge impact on asset managers. Under the regulation, insurers must report on fund investments on a look- through basis down to the holding level. To win new insurer AUM, asset managers must have a credible response to requests for Solvency II look-through.
The largest challenge posed with Solvency II for asset managers is how to make their position inventories, their IP, available to clients, peers and aggregators in a secure, controlled and timely fashion. Silverfinch is the fund data utility that enables the controlled distribution of timely data within a secure environment.
The “Versicherungsaufsichtsgesetz” (Insurance Supervision Act), or “VAG”, is the German act for the supervision of insurance undertakings. Insurers are subject to quarterly reporting requirements with respect to acquisitions of certain assets and investments; this includes reporting the composition of investment funds in which they hold units.
Insurers must compile the necessary investment fund data to comply with these reporting obligations and deliver them in the industrywide standardised format. This encompasses the required breakdown of assets (holdings and AUM to the target fund level) by investment type and sector, as well as the debtor list and special fund notification, providing proof of the observance of regulation driven inter-mixture and diversification quotas as well as the so-called risk capital quota.
Großkredit-und-Millionenkreditverordnung, also known as GroMiKV, is a German regulation transposing the CEBS guideline regarding the large exposure regime into national law. This regulation is relevant for German credit institutions which are obliged to report their large exposures to the supervisory authority in Germany. The regulation governs the reporting thresholds and limits for issuance of loans to single borrower units by banks and other financial service providers.
These rules give rise to a comprehensive array of requirements on consolidation of credit risk positions across a variety of vehicles (including investment funds) and enterprises included in the same borrower unit. To support their German clients, asset managers are required to provide monthly reporting. The amended version of the GroMiKV that entered into force at the start of 2011 now also extends these requirements to target funds contained in an investment fund structure; look-through is now part of reporting requirements.