Confidence talks about what you can do – bravado talks up what you can’t. When it comes to our area of expertise – regulatory data management and exchange – we reckon we are up there with the best. Still, working with a demanding and exacting industry such as the asset management sector, it’s important that we are frank about what we can and can’t do for clients.
If only others had the same approach.
It’s now being widely reported that PRIIPs manufacturers are struggling to get the information and calculations they need for their PRIIPs KIDs from document production vendors. Based on the number of highly stressed firms that have approached us recently, having been burned severely by their vendor, it seems we have many firms with beautifully crafted documents that are bereft of actual data. In each case the PRIIPS manufacturers had agreed a contract with a document production vendor on the understanding that the service would include the collection and aggregation of EPT data along with the key PRIIPs calculations. In hindsight, it now seems fanciful that some of these businesses with no apparent or demonstrable expertise in data management, large-scale data collection or in-depth analysis would be able to provide this service efficiently, and at the scale they promised.
It seems there are three areas of concern:
- Transaction cost calculations: some firms have realised a little too late that calculating transaction costs is not easy, and that unfortunately some of the vendors offering services did not understand what they were doing. If a deal is too good to be true, it’s too good to be true.
- SRI, Performance Scenarios and RIY calculations: based on EPT data flowing through Silverfinch we can see quite readily that some firms have serious flaws in their calculations. On the flip side we have had PRIIPs manufacturers ask us to run shadow calculations against what their document vendor came up with and again there are several serious flaws that we have uncovered, some of which are shocking.
- EPT Aggregation: worst of all, there are PRIIPs manufacturers who’ve now realised their vendor was never set up in the first place to collect efficiently the thousands of EPTs they need in the short timeframe required, and then maintain this workflow on an ongoing basis. The vendors simply do not have the technical infrastructure and fine-tuned operational structure to do this task at scale.