The financial industry is particularly concerned by the exponential growth in data to be managed. In the wake of new regulations, in particular MiFID, Basel III, Solvency II and AIFMD, institutional investors and investment management companies invest in massive data management and analysis in order to meet transparency requirements in terms of information and reporting to the relevant national authorities.
Take Solvency II as an example of the transparency-based approach needed to calculate the Solvency Capital Requirement (SCR) and produce regulatory reports (Quantitative Reporting Template – QRT). Insurers and investment management companies are using static and dynamic data obtained from the various inventories that have been made transparent, which contain more than 1 million financial data points. An insurer holding a portfolio of 300 assets with around 20 funds and 30 or so unit-linked products has to manage over 400,000 financial data points in order to calculate its SCR and produce its regulatory reports.
Governance and Data Quality
The Solvency II Directive and its delegated acts spurs on the quality of data. Article 82 of the directive stipulates “Member States shall ensure that insurance and reinsurance undertakings have internal processes and procedures in place to ensure the appropriateness, completeness and accuracy of the data used in the calculation of their internal provisions”.
In its last enquiry into Solvency II preparations in June 2015, the French Prudential Supervisory Authority (ACPR) rang the alarm bells, since over 40% of companies had not implemented data governance systems and over 60% did not have a formal data quality policy. This is a real challenge addressed by CACEIS for its clients thanks to its operational ability to achieve transparency and enhance data in a uniform way within the required time frames.
Data Analytics Facilitates Fund Transparency
Data analytics provides a number of opportunities for the financial industry. The problem faced by institutional investors and investment management companies concerns accessing the relevant data within a short space of time.
On CACEIS’s OLIS website, clients view and edit dynamic and configurable financial reports containing information relating to the performance and financial risks of their portfolios. Soon, they will be able to obtain mutual fund transparency. They will have access to accurate information on the overall exposure to a given issuer.
CACEIS teams have developed a transparency engine to help clients prioritise the transparency process: quality, exhaustiveness of information and speed of the process. They produce a quarterly transparent inventory, which allows clients to calculate the SCR within the required time frame and carry out control procedures in the form of reporting.
A Marketing Tool
CACEIS, a leading European fund administrator and transfer agent, owns a data warehouse enabling it to obtain representative indicators for investment management companies. For example, ex-post analysis of subscriptions and redemptions will allow the determination of a correlation between investor' behaviour and a fund’s performance relative to its benchmark. This information can be of valuable assistance in establishing the fund’s commercial positioning. These reports will enable investment management companies to achieve more in-depth marketing analysis (inflows, investor behaviour, distribution network etc.). In addition, analysis will be provided by type of final investor, country and distributor.
Investment management companies will also be able to better determine their target clients and distribution network. Clients will have access to this information and analysis via CACEIS’s OLIS website.
CACEIS stores and analyses a growing volume of data at a very fast rate. We will develop innovative services to create value for its clients using big data technologies.
Read the article (in French) "De la donnée au Data Analytics : défi et opportunité pour la gestion d’actifs" (Magazine Instit Invest mars 2016)