At Deutsche Bank Fund Services, one of the industry’s leading alternative fund and managed account administrators (the bank also boasts two leading MAPs in the form of dbSelect and dbAlternatives), putting the tools in the hands of its clients to meet the unique reporting challenges of managed account mandates is a priority.
This is critical in today’s marketplace where regulation is shaping the way fund managers approach investment management. Whilst the likes of Form PF and AIFMD are aimed at hedge funds, they naturally impact the way data is processed and delivered in managed accounts.
“You have to be a global player to understand these regulatory implications. Regulations authored in local jurisdictions have the potential to impact the investment industry across the globe,” says Kristin Castellanos (pictured), Director GTB Product Management, Deutsche Bank Fund Services.
“As a global bank with a commitment to this business, we have access to governmental and regulatory affairs and market advocacy teams that not only keep us advised on regulatory changes but give us a global perspective on how these changes impact our clients and their investors.”
For administrators, staying on top of regulation is only half the challenge. The other challenge is understanding what clients want. “Take FATCA as an example. We know what its implications are but what do clients want from us to help them comply? That’s when things move into analysis and product/system development and that’s where we are today,” explains Castellanos.
Deutsche Bank has focused on building out its flexible technology platform; a vital exercise considering the added regulatory burden of collecting counterparty details for OTC transactions under Dodd-Frank and EMIR.
“We’ve got the technology in place to collect all of that data and report it either to the responsible officer of a fund or to the investment manager to help them with their regulatory and investor reporting,” adds Castellanos.
“In addition to enhancements to our technology architecture, regulation has also prompted us to take a look at what works from a target operating standpoint in terms of a ‘follow the sun’ model.
“That means having systems that can collect a wide variety of data from different sources and process it efficiently. Our team in Bangalore takes those feeds from different counterparties, reconciles them and sends them to our Dublin centre of excellence where daily indicative NAVs are compiled. Each morning when a manager switches on their computer in London or New York, exception reports for any unresolved breaks and all of the daily reporting – attribution reports, P&L reports and exposure reports – are already there.”
Regulation has, therefore, helped enhance the service levels for both funds and managed accounts and as Castellanos notes, it has forced the whole industry “to adopt a more efficient operating model and systems that can process high volumes of data”.
This is no more apparent than in the area of middle office support. Beyond the standard back-office support function, Deutsche Bank’s clients are able to avail themselves of reports that precisely mirror the way they view the world from a trading perspective.
As Castellanos concludes: “If you’ve got the inputs right and you’ve got the systems that can handle them you should be able to give clients the outputs they require. Our systems, our analytics and client reporting have to be a natural extension of the way the manager views the world. It’s key to delivering exactly what they want.”