New and changing regulations. New technology. Shifting ideology.
It’s not ground-breaking news, but change around shareholding disclosure requirements does leave investment management companies facing even more scrutiny and operational burden like never before. With the advent and adoption of new technologies widely available to managers, the asks of the regulators have also changed and been updated to match. As a result, global regulators like the U.S. Securities and Exchange Commission and Financial Conduct Authority have doled out more fines and penalties to investment companies for failure to comply with shareholding disclosure thresholds, deadlines, and incorrect filings.
So, how can firms get a better sense of what are the headline areas they need to focus on?
Where to Focus
A lay of the land is important, and, with many years of expertise in the nuances of shareholding disclosure, we’ve identified five key pillars to consider: Legislation, Events, Aggregation, Data, and Regions. Or for short, LEADR.
Legislation: In the last few weeks, we’ve seen unprecedented change in some of the largest markets in the world. New and amended regulation continues to reshape the reporting landscape rendering the monumental task of staying compliant a moving target.
Events: Markets are dynamic. Every day publicly traded companies act in the best interest of shareholders. What that means for investment management companies is that every day changes take place that alter reporting obligations. Corporate actions and takeover panels result in positions often becoming disclosable without managers lifting a finger and any deliberate action taken. Should an underlying denominator change or a company land on a takeover panel, managers must comply and file these passive disclosures the same as they would anticipated filings.
Aggregation: The call to aggregate holdings by regulators remains unique - there is no uniformity in what aggregation structure or aggregation level investment management companies must aggregate to in their filings. Some regulators want the full picture of the corporate tree. Others are focused on the relationship each entity has with the assets it holds, the assets it manages, or voting rights.
Data: Data is the cornerstone of compliance. No filings can be made, positions checked, or forms filled out without accurate, workable, consistent data. Yet managers continue to fall victim to the nuanced difficulties posed by data. As simple as an incorrect denominator and as complex as index look through calculations, data is at the heart of remaining compliant.
Regions: Florange Law. Swinging thresholds. Tax Havens. These specific, complicated regional regulations serve as hurdles and barriers to trading confidently in new jurisdictions. Without a complete picture of the regional caveats in various jurisdictions and economic areas, management companies will always be at risk of fines and reputational damage.
This is just a snapshot of each pillar. Join us as we walk through these pillars in depth with our upcoming five-part series. We are going to start with data - we’ll talk through the challenges we see most commonly faced, how these can be overcome and also look at how firms can develop a future-proofed approach to staying compliant.
We look forward to you joining us through our blogs, webinars, videos and more.
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