By Keith Parker – Guernsey is an important jurisdiction for Pacific Fund Systems in terms of both existing and potential clients. A key reason for our interest and commitment to the island, as well as nearby Jersey, is the integrity of the jurisdiction, including its emphasis on transparency within the financial services sector.
Recent years have seen a flight to quality within the industry as companies become more focused on where and with whom they do business. Once relegated to the margins, reputation is now arguably one of the most critical risk considerations, and the key driver in mitigating reputational risk is transparency.
Guernsey and other equivalent jurisdictions have realised the need to take transparency seriously not only to attract new business but to ensure existing companies feel comfortable there. Aspects of transparency range from the general, such as signing tax information exchange agreements with other jurisdictions, to the specific information demands of individual investors.
The new emphasis on transparency has profound relevance for technology companies as fund managers and administrators continue to automate as many processes as possible. At its epicentre is the highly valuable commodity of information.
Users of our fully integrated share registry and fund accounting platform, PFS-PAXUS, have an enormous amount of information at their disposal in one centralised database, but the data only becomes truly valuable when aggregated – or deconstructed – in a targeted and user-friendly manner.
A powerful catalyst for transparency is the desire of stakeholders in the investment process to examine their investment or involvement on an ongoing basis. Our web portal, PFS-CONNECT, empowers fund managers, investors and advisors to access detailed information in real time.
Allowing clients web access to reports or investment-related information reduces the client service burden on administrators and managers. Investors and their agents feel part of the overall process, a psychological boon to the transaction mechanic between investors and managers or intermediaries.
Institutional investors in alternative funds often make enhanced transparency a precondition of their investment – sometimes not only individual instrument exposure information but the entire fund’s accounting records, to scrutinise fees, expenses and other items.
Since investment managers are typically reluctant to divulge real-time individual exposures, especially those involving shorting, common compromises include time-delayed exposure data or the provision of real-time data aggregated by market sector.
Amid the focus on the origin of prices used in valuations and the reliance of a fund’s NAV on particular valuation sources, PFS-CONNECT can report what proportion of NAV was valued using different types of sdata provider.
The industry also wants transparency on counterparty exposure. PFS-CONNECT allows this to be balanced with confidentiality concerns by permitting customisation of transparency reporting down to individual investor level.
Receiving information direct from the administrator’s web portal boosts investors’ comfort by reducing the risk of fraudulent manager reporting, and is enabled seamlessly through a fully integrated portfolio, general ledger, share registry and web portal platform. Administrators with multiple underlying systems find it far more expensive and difficult to deliver real-time transparency.
As transparency requirements rachet up, all parties accessing common information through a common web portal creates a virtuous circle of client confidence and stronger relationships.
Keith Parker is head of sales and marketing for Europe at Pacific Fund Systems