Investment Compliance Monitoring (ICM) has been saved
Investment Compliance Monitoring (ICM)
A summary of ICM tools and services
Asset management organizations often face challenges with achieving operational consistency in their ICM programs. These programs are considered a critical line of defense in maintaining compliance with regulatory regimes and compliance mandates. It is important for asset managers to employ a standard set of investment compliance and monitoring tools that help them establish, execute, and maintain compliance with these requirements so that they are aligned with regulatory, client, contractual, and risk-sourced investment restrictions.
Investment compliance monitoring services
Deloitte’s Investment Compliance services and investment compliance tools can assist asset managers and service providers in their efforts to enhance the efficiency and effectiveness of their compliance monitoring capabilities. We help our clients perform contract analysis of source documentation, such as investment guidelines and prospectuses, to identify, capture, code, and test investment restrictions within the ICM system on a remedial and forward-looking basis.
Additionally, we assist our clients in designing and implementing a target operating model (TOM) for the ICM function and in selecting and optimizing the implementation of automated ICM systems, all aligned with leading industry practices.
Investment compliance transformation presents a significant opportunity
Deloitte’s professionals bring a deep knowledge of leading ICM practices, as well as vendor and proprietary ICM solutions employed by managers of all sizes and product specialties, allowing us to provide industry-leading services, including the following:
- Investment rule identification and transparency
- TOM design
- Transition planning
- ICM systems selection and optimization
Deloitte’s Unify Investment Compliance (UnifyIC) technology enables the ICM life cycle and captures and manages investment restrictions through database and workflow functionality.
UnifyIC solution: Deloitte’s investment restriction management system
Deloitte’s UnifyIC technology captures and manages investment mandates through database and workflow functionality, creating tangible benefits across various stages of the ICM life cycle. UnifyIC, Deloitte’s cloud-hosted software-as-a-service (SaaS) technology, centralizes all the requirements that are coded into an order management system (OMS), which can enable better accountability and monitoring quality among compliance users, ultimately benefiting the bottom line.
- Workflow initiation: Users create a unique workflow assignment for each contract
- Restriction clause identification: Reduce manually intensive extraction tasks via an intuitive interface to accelerate contract analysis
- Restriction requirement generation: Enable consistency and uniform, plain-English interpretations across accounts upstream of OMS
- Interpretative issue management: Build and maintain a unique repository for interpretive issues
- Rule coding, testing, and validation: Rule coding and testing tracks and monitors the account life cycle for effectiveness and highlights efficiencies
- Report generation: Download account-level restriction reports directly from the technology solution
- Creates a centralized information repository of restriction details (contracts, supplemental documents, account details, and investment restrictions)
- Cloud-hosted web application to perform contract reviews and support rule coding and rule testing
- Content (restriction details) is available in configurable formats and structures for ease of use and review across multiple users and applications
- Supports the management of restrictions through the contract life cycle
- Provides a centralized and governed workflow process to manage investment restrictions
- Creates an audit trail from source documentation to the OMS, with a single place to view all rules on a contract regardless of OMS
- Provides the ability to search a centralized repository to aid in avoiding duplicated rules in the OMS
- Integrates with external systems to enable inbound feeds of account master metadata
- Rule search accelerators in a customized user interface
- Customized rule- and account-level reporting
Investment compliance case study
The ICM case study highlights examples of how we can assist clients in redesigning and implementing a transformed investment compliance function. We work with clients to help them redesign and implement their operating models for this function, resulting in benefits such as an establishment of a center of excellence and shared service center, a reduction of cost, or a reduction in their rule inventory by 50% and mitigation of audit findings.
We have also assisted clients in enhancing their investment compliance operating model by licensing them UnifyIC, Deloitte’s cloud-hosted SaaS solution, which is designed to help clients address many of their operating model challenges for the investment compliance function.
Regulatory and compliance managed services
Asset management firms have long faced formidable challenges, including intense competition, rapid technological change, rising costs, and pressure on profits. Addressing these challenges and positioning the firm to thrive in a postcoronavirus environment calls for assessing the firm’s performance across all activities; investing in people, processes, and technology related to those activities; and then measuring the return on those investments.
Current conditions have heightened the need to address compliance challenges so as to enable firm leaders to focus on issues related to growth and profitability. One potential solution can be found in applying a managed services model to asset management compliance.
ESG impact on the ICM lifecycle
As global demand for Environmental, Social, and Governance (ESG) factors in investment strategies accelerates, regulators are responding rapidly to changing investor preferences. Regulators are trying to improve the transparency on integrating ESG factors into investment strategies by introducing more stringent sustainability related disclosures. As an example, the European Union has published the Sustainable Finance Disclosure Regulation (SFDR) which requires financial market participants to disclose how they consider sustainability risks and adverse sustainability impacts in their investment decision process. Publication of such regulations may also warrant financial market participants to re-evaluate other aspects of the investment management program such as ICM.
This overview explores the various activities involved in an ICM lifecycle and the potential impact that a regulation like SFDR could have on each of these activities. This can help firms identify areas they may need to re-evaluate with the changing regulatory landscape.
Deloitte can help
Please let us know if you have an interest in learning more about the services that we are actively providing to help organizations prepare for what may lie ahead. Contact a member of our leadership team to discuss your needs or reach out to us at firstname.lastname@example.org.
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