SEI introduced a new global regulatory risk and compliance platform that centralizes handling of an investment firm’s regulatory and compliance functions across investment vehicles, products, and jurisdictions around the globe. SEI’s Investment Manager Services (IMS) division developed the suite to help its diverse investment manager clients rein in the escalating costs and risks resulting from the industry’s fast-rising tide of regulations.
“For years, investment managers have dealt with regulatory compliance in a reactive and siloed way, focusing on one product type, regulator, or regulatory regime at a time. But that approach is inefficient and error-prone, poses risks of non-compliance, and can hamper a firm’s ability to grow into new products and markets,” said Jim Warren, head of Solutions Strategy & Development for SEI’s Investment Manager Services division. “SEI’s platform solves those problems by giving investment organizations an integrated, streamlined way to manage and execute compliance functions firm-wide.”
SEI has designed its new compliance platform as a standalone solution that is not limited to clients of its operating services. SEI will import data for non-client firms, allowing them to take advantage of the platform regardless of where their fund accounting and administration functions are serviced.
The new SEI platform builds on the variety of regulatory and compliance solutions the firm has been providing since the mid-1980s, wrapping them in a customizable framework for managing compliance functions throughout an investment firm. The platform integrates the technologies, services, and expertize that asset managers need to comply with all major regulatory requirements and internal client guidelines for their particular mix of products and markets.
SEI’s recent white paper, Evolving in the New Operational Frontier, identified regulatory costs and pressures among the top business issues asset managers face. Additionally, a recent McKinsey & Company benchmarking study of more than 300 institutional participants found that their compliance-related costs increased by an average of 12% annually between 2007 and 2014. The McKinsey study also pegged the current total costs of compliance at more than $3 billion annually for traditional firms. A 2013 KPMG hedge fund survey found their annual compliance costs to total another $3 billion a year.
The platform is designed with open architecture and modular service components, several of which are available individually or as part of the complete platform. The components include:
“Our regulatory analysis shows that investment firms are subject to nearly 500 financial regulators, exchanges, and industry groups. The continual escalation of regulatory rules and reporting requirements greatly increases the demands on information systems. It also compounds the risks of non-compliance as well as executives’ personal liability,” continued Warren.
“Having an efficient and streamlined approach to compliance is now a key competitive factor for managers who are trying to navigate what we call the new operational frontier,” Warren concluded.