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Regulatory ERM solution to support Annex IV

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ConceptONE LLC specialises in regulatory and risk reporting, an area of expertise that is fast gaining prominence as alternative fund managers begin to comprehend the enormity of regulatory compliance.

“We have developed a regulatory enterprise risk management solution – RegERMTM – specifically to meet the regulatory reporting challenge,” states Gary Kaminsky (pictured), Managing Director, Global Regulatory & Compliance at ConceptONE.
“It’s a holistic system because regulatory reporting now comes in many forms: not just Annex IV reporting under AIFMD, but Forms PF and CPO-PQR under Dodd Frank and EMIR and ESMA short selling.”
Annex IV reporting shares certain data with Form PF in the US but the level of complexity is arguably higher.
A legal regulatory skill set is needed to complete the form, something that Kaminsky is well experienced in having formerly worked as an SEC enforcement attorney, but in-depth knowledge of hedge fund risk and operations management is something that Kaminsky and the ConceptONE team also bring to the table.
“Aside from having a multi-disciplined team you also need to have the right combination of systems. It’s partly data aggregation, partly data warehousing and it’s partly a technology solution for the actual reporting element,” says Kaminsky.
What ConceptONE’s solution does is to aggregate data from various sources into a centralised warehouse. Technology engines then normalise the data and enrich it for population into regulatory reports. ConceptONE’s task is to enable clients to achieve at least three reporting goals:
Firstly, that the filing is not “incorrect”. While there may be no correct answers to the questions, there can be incorrect ones, namely inconsistent, disparate reporting. Managers will want to guard against data and analytics used in Form PF deviating from what they report in Annex IV. Second, says Kaminsky, it’s about trying to create a repeatable process so that each time a manager files it doesn’t have to reinvent the wheel and require the firm’s compliance and operations group to shut down to complete the task
“This is comprehensive reporting that involves sharing sensitive information and it takes a lot of time to aggregate the requisite data. A manager doesn’t want to have to do that every time they file. Regarding Annex IV, it could be that the manager has to file twice or four times a year depending on how big they are. And EMIR reporting is daily. So you need a repeatable process.
“Third, and maybe most importantly, you need an audit trail. Ultimately, somebody is going to ask why something was reported in a certain way (regulator or investor), these queries may take place months or years after the filing and if the manager can’t explain their approach, they could end up being the subject of a long investigation by the regulator,” comments Kaminsky.
There are thousands of data points involved in regulatory reporting. What ConceptONE’s solution does under Annex IV, which contains approximately 60 questions and thousands of data sets, is break the data points down into 18 proprietary data sets. The solution then finds the data needed to populate each of those data sets.
“This is a very large data management exercise involving disparate sources. Although it’s not rocket science doing these reports, it’s about how much time and resources a fund manager wants to give up – better to take advantage of experts like ConceptONE.” 

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