Today, we offer our “Friday List,” an occasional feature summarizing a topic significant to investment management professionals interested in regulatory issues. Our Friday Lists are an expanded “Our Take” on a particular subject, offering our unique (and sometimes controversial) perspective on an industry topic.
As the compliance profession has matured since adoption of the compliance rule in 2004, many innovative firms have developed technologies to help chief compliance officers and their organizations more effectively manage regulatory risk. Under pressure to do more with less, almost all compli-pros utilize one or more of these tools to ensure an effective program. Below, we list the top 10 areas where technology tools can help CCOs adopt a reasonably designed compliance program in an environment of expanding obligations and responsibilities.
Top 10 Compliance Technology Tools
- Personal Trading: Probably the most-used compliance technology, several firms offer excellent products to collect and manage personal trading monitoring and pre-clearance as required by the Code of Ethics.
- Email Review: Just the sheer number of emails transmitted, even in the smallest firms, begs for the implementation of an automated email review system.
- Cybersecurity: There is an entire industry of technologies employed for threat assessment and penetration testing as well as remediation and protection.
- Portfolio Management: One of the biggest risk areas involves portfolio dispersion and failures to invest in accordance with client mandates. Several technologies can monitor for non-compliant trading.
- Anti-Money Laundering: A developing area, we have seen some excellent tools to help comply with AML and KYC requirements.
- Performance Reporting: Performance reporting (and related recordkeeping) can be better managed by software tools that avoid human intervention, thereby ensuring accurate calculations and ease of presentation.
- Marketing Review: We like several tools that manage the workflow and document management requirements of the marketing review process. Such tools maintain a library of drafts for regulatory inspection.
- Best Execution: All money management firms must ensure best execution. Several technologies are available to measure and demonstrate how a firm selects and executes trades.
- Regulatory Reporting: If your firm still does Form PF or 13F manually, consider a software tool that can help you pull data and populate the forms.
- Financial Reporting: First adopted for mutual fund financial statements, larger firms should consider some of the financial reporting tools that create financial statements, thereby reducing outside fees and human error.