The Perils of ‘End-to-End’ Solutions to SEC Reporting Modernization That Don’t Go From End-to-End

One of the common idioms here in the US that my European colleagues may not be familiar with is “soup to nuts,” meaning from beginning to end. As I sat down to write this piece for the Accudelta blog, it jumped out at me that one of the biggest risks that the mutual fund industry is taking right now is the assumption that their service providers’ “full” solution to Form N-PORT does actually include soup and nuts.

There is no doubt that for many firms that have historically partnered with one of their service providers for regulatory reporting, their first port of call will of course be to look to them to solve next year’s SEC Reporting Modernization challenge. The difference with this regulation can be highlighted in two key points in my view:

  • There is a huge increase in the amount of data that is required and needs to be managed, and not all of this (typically less than 70%) sits with the service provider today
  • The increase in reporting frequency from quarterly to monthly compresses the available time for data processing and compliance signoff by a factor of three

In other words, there is a lot more data that needs to be sourced and managed, and that all needs to be turned around and signed off in 30 days instead of 90. This is a significant technical and operational challenge.

It strikes me that too much conversation is being spent talking about liquidity and filing, when in reality these elements are soluble in a straightforward manner and will be part of the “entrée” of any solution.

The heavy lifting comes outside of this, and here it would very much appear that service providers are either grossly underestimating or downplaying the complexities associated with the data management and signoff challenges above – when push comes to shove, the mutual fund complexes are going to have to solve these problems themselves outside of the “complete” solution that their service provider has kindly served up.

Data management is more than accepting data in a number of templates or formats; the workflow around data aggregation, validation, and quality control to ensure that the information being filed is up-to-date and accurate is complex and requires a technical (and operational) solution that is designed for this purpose.

Likewise, to enable efficient signoff of the actual form before it is filed – technology needs to be employed to make this process as streamlined as possible – mutual fund complexes should not be left with a pile of paper and highlighter pens.

If you are looking to address the Reporting Modernization challenge, I would urge you to invest the time now to thoroughly understand how the above will be addressed in your proposed solution and target operating model. Use demonstrations and proofs of concepts now as tools to ensure that you are not left scrambling to prepare soup at the last minute – promises of future capabilities are not good enough; these capabilities need to be in place today.

For many fund complexes the data challenge above is significant – this work needs to be happening right now.

By 2018, it will be too late for complaints.


Guest Post written by Accudelta Managing Director Conor Smyth.
Accudelta, like Ascendant, is part of Compliance Solutions Strategies, a leading provider of technology-enabled regulatory and compliance solutions to the financial services industry.


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CSS frequently publishes blog posts which are written by our team from their observations in the field, at conferences and through experiences with compliance professionals. These posts are designed to further knowledge and share industry best practices. Topics run the gamut, including Form ADV, cybersecurity, MiFID II, position limit monitoring, technology challenges and more. Complete and submit the brief form below to receive notifications when we publish new content.

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