asset management advisory services TCC Asset Management 1

Transcription

1 asset management advisory services TCC Asset Management 1

2 tcc overview TCC delivers expert solutions to the asset management sector through the following core competencies: Governance & Culture Risk Management TCC is the largest independently owned compliance consultancy in the UK. TCC has an excellent reputation for delivering specialist regulatory compliance services. The core competencies of the business revolve around understanding the FCA s expectations in the relevant market and providing practical solutions allowing firms to appropriately meet these requirements. systems & controls change implementation TCC s support to clients includes understanding their individual requirements and assisting with project scoping, business model and processes analysis, regulatory mapping, controls gap analysis, regulatory and business change impact assessments, processes and policies development, planning and implementing any required remedial actions. TCC Asset Management 2

3 asset management support TCC has a proven track record in providing support to our asset management clients. The experienced Asset Management Advisory Services Team includes: Ex-FCA Supervisors in the Asset Management Department who have previously led individual firm risk assessments, thematic reviews and fund supervision andrew glessing Managing Director Advisory Services Compliance professionals who have held numerous regulatory/compliance policy and monitoring roles at large and medium sized global asset managers Individuals with experience in back/middle office functions and within global transfer agents and third party administrators Experience within associated sectors including Wealth Management, Financial Advice, Life and Pension Providers and Discretionary Fund Management All of the Advisory Services team have extensive experience working for the FCA or within compliance functions of regulated firms TCC Asset Management 3

4 FCA business plan themes The FCA published their 2015 Business Plan in March. For the first time, there is significant focus from the FCA on the asset management sector, with commitment to developing an asset management market study. Below lists key themes from the Business Plan, many of which read across to the to the MiFID II European requirements: Culture Including governance, responsibilities of the board, management information and escalation of issues, autonomy and empowerment of control functions, accountability, remuneration, recruitment Market abuse FCA s expectations of firms and their controls and new focus on high frequency trading Fund charges paid by investors Transparency and clarity and unfair contract terms Inducements and conflicts of interest Reference to potential MiFID II requirements Distribution models The FCA will undertake a market study into non-advised sales of investment and protection products, including how firms support consumers in choosing products that are suitable for their circumstances Post authorisation review of funds and segregated mandates Whether funds are investing and performing as stated in the fund material (factsheets, KIIDs and prospectuses); likely to consider model portfolios, risks, charges, target market Financial crime controls Focus on both anti-money laundering (including sanctions and terrorist financing) and anti-bribery and corruption measures Technology resilience The FCA will take action on firms that fail to maintain technology that could result in risks to consumers. Firms must have a robust BCP plan in place and sufficient protection against cyber crime Implementation of EU law The FCA made reference to its implementation of various measures which will require changes to policies and procedures, including MiFID II, Market Abuse Regulation, PRIIPS, Benchmark Regulation TCC Asset Management 4

5 mifid ii/mifir requirements In early 2014, the European Parliament and Council adopted new legislation that will overhaul MiFID. The revised Directive (MiFID II) and new Regulation (MiFIR) represent a significant set of reforms which will lead to a reshaping of the financial markets, the products and services that firms provide and the relationship between firms and their customers. Both MiFID II and MiFIR entered into force on 2nd July 2014, and must be implemented within Member States by 3 January Key focus areas for asset managers include: Product design and governance product approval process requirements, including target market and risk identification New power around product intervention MiFIR is proposed to give regulators new powers to prohibit or restrict the marketing distribution or sale of certain financial instruments or financial activity Transparency requirements including costs/charges, execution venues, third party payments Voice recording requirement to record all telephone and faceto-face conversations that may lead to the execution of an order 6 7 Best execution and order handling policy must contain sufficient detail, be in clear to understand language and firms must make public for each class of instrument the top 5 execution venues used on an annual basis and firms should not receive any remuneration for routing client orders to particular trading or execution venues Inducements investment firms undertaking portfolio management will be banned from accepting fees, commission or any other benefit paid or provided by a third party relating to the precision of services to clients. Still to be determined whether investment research and execution-related services provided to IMs out of dealing commission will be permitted 5 Execution-only banned for further instruments e.g. structured UCITS funds, shares that embed a derivative, bonds not traded on regulated markets 8 Bundled services firms will be required to provide evidence on the costs and charges of each component of a service (e.g. execution and investment research services) TCC Asset Management 5

6 hot topic - market abuse The FCA conducted a thematic review of how asset management firms control the risk of committing market abuse. The review considered how firms control the risks of insider dealing, improper disclosure and market manipulation, with a primary focus on equities and insider dealing. Firms should review their policies and procedures to control the risk of market abuse and ensure that these operate effectively and cover all material risks. Managing the risk that inside information could be received but not identified Controlling access to inside information and managing the risk of improper disclosure Pre-trade controls to prevent market manipulation and insider dealing Key Points: Effective policies to identify and capture inside information which are consistently applied Policies should include when information is unintentionally received (e.g. when enough details are provided for the fund manager to deduce the company and the nature of the event) Policy limiting the sharing of inside information to those who need to know Monitoring in place to assess the effectiveness of this policy Pre-trade block on trading securities on the restricted list (and ensuring securities are added to the restricted list on a timely basis) Documenting the rationale for trading decisions Good Practice: Wall crossings - an initial point of contact for soundings that is independent of the fund managers Company-specific research - a designated point of contact for staff to discuss any concerns about whether inside information might have been received and a consistent approach to meeting companies prior to results being published Maintaining a detailed log of who is privy to the inside information A segregated dealing function which can flag potentially manipulative transactions ü ü Recording the telephone lines of staff directly involved in the investment process TCC Asset Management 6

7 hot topic - market abuse Key Points: Post-trade surveillance that effectively highlights potentially suspicious trades (including trades preceding price-moving corporate announcements) Good Practice: Post-trade surveillance Thoroughly investigated any potentially suspicious transactions Regular monitoring of the recorded telephone lines of fund managers and traders Comprehensive documentation of external meetings Personal account dealing policies Awareness of front office research activity Effective policies and procedures to reduce the risk of market abuse Requiring pre-trade approval for PA dealing and conducting a post-trade review to monitor for any suspicious activity Face-to-face training to complement online training Training Training (new joiner and annual) to ensure employees understanding of the market abuse rules is kept up-to-date Include recent market abuse cases/scenarios specific to the firm Frequent reminders to staff to be alert to the risk that information could be received in unexpected situations TCC Asset Management 7

8 tcc areas of expertise Corporate governance structure and effectiveness Management information provided to Boards and Committees Senior management responsibilities Culture and treating clients fairly Conduct risk Governance & Culture Training and competence requirements Recruitment, remuneration whistleblowing policies Business model analysis and risk identification Market conduct, including trading practices Inducements and conflicts of interest Product design and governance Policies and procedures Client money Fee structures risk management Oversight of third party providers and contingency plans TCC Asset Management 8

9 tcc areas of expertise systems & controls change implementation Transaction reporting Portfolio compliance - trade monitoring Best execution and order handling Market abuse controls Financial crime controls Errors and incidents IT resilience MiFID II AIFMD Market Abuse Regulation Global operating models Order management system implementation Impact assessments Post implementation review TCC Asset Management 9

10 client engagement examples TCC has undertaken a variety of client engagements in the asset management sector, which include: Conduct Risk Detailed review of firm s conduct risk within the business model, including culture and governance, product development and distribution processes regulatory change Assessing compliance with the AIFMD with particular focus on risk management, fund valuation and board reporting compliance function Full-scale review of compliance structure and framework, including re-designing the compliance monitoring plan, development of new policies and procedures and providing training to staff where gaps were identified portfolio monitoring Review of portfolio monitoring arrangements with particular focus on best execution and market abuse controls change implementation Long-term project leading the compliance implications of implementing a new global order management system, including the development of a new global target operating model for compliance transaction reporting Assessing the completeness and accuracy of transaction reporting arrangements, including operational procedures, compliance testing and oversight of third parties TCC Asset Management 10

11 For more information about how we can help your business, get in touch on to arrange a meeting to discuss your individual requirements. case study: full compliance review and remediation Client: A medium sized UK-based asset manager Background: Development of processes, procedures, systems and controls had not kept pace with the growth of the business and increasing regulatory requirements Task: Required a full FCA-style assessment of its compliance framework, highlighting any gaps or weaknesses TCC approach: Business analysis: Full scale business model analysis and understanding of the scope of the firm s activities Regulatory mapping: Determining all applicable regulations, FCA handbook requirements and FCA permissions required Risk identification: Identifying all risks associated with the business model, including all conflicts of interest Gap analysis: Assessing the adequacy of current risk management activities, including all governance and oversight arrangements in place Remediation design: Design of a new risk management framework from risk identification process through to management, mitigation and the ICAAP Implementation: Updating policies and procedures, introducing a new compliance monitoring plan and risk log. Detailed project management plan and timelines and provided regular updates to senior management Training: providing training to staff where knowledge gaps were identified (e.g. market abuse) TCC Asset Management 11

12 For more information about how we can help your business, get in touch on to arrange a meeting to discuss your individual requirements. case study: new global compliance operating model Client: Top 5 global asset manager Background: Their existing operating model and architecture was based upon the consolidation of a number of legacy boutique businesses, and as such was complex, inefficient and costly and carried significant operational risk Task: The client was implementing a new order management system and required full re-engineering of their compliance processes, systems and reports globally TCC approach: Business analysis: Primary analysis to understand the firm s current systems, processes and controls in place across all offices globally Impact analysis: Working closely with the business to understand their requirements across all front to back office functions and hosting global workshops to discuss current state processes Requirements: Follow-up workshops to set out the future global operating model and processes and to discuss identified challenges, inconsistencies in local processes and regulatory requirements Project management: Monitoring key deliverables against planned deadlines, tracking risks and issues through to resolution in a RAID log and providing updates to the committees Implementation: Sitting alongside the business stakeholders in different locations globally and supporting the implementation of new systems, processes and reports and improvements required Testing: Conducting user acceptance testing of the newly implemented processes, systems and reports TCC Asset Management 12

13 asset management team chris martin Senior Regulatory Consultant The Asset Management Team is led by senior regulatory consultant Chris Martin. Get in touch with him on to arrange a meeting to discuss your individual requirements. andrew glessing Managing Director Advisory Services Profile: Chris is a Regulatory Consultant with nearly 10 years experience in financial services, specialising in Asset Management. TCC: Client engagements have included conducting assessments of firm s compliance functions, including governance arrangements, systems and controls, policies, processes and procedures, implementation and oversight of remedial actions; advising firms on the impact of new regulation and recommending changes to comply with the new requirements; Compliance workstream lead for implementation of a new Order Management System (OMS) at a global asset manager. FCA: Chris was previously Lead Associate in the Complex Events Team in the FCA s Supervision Division. Prior to that he was a Senior Associate in the Asset Management and Advisers Department. His work included leading firm specific risk assessment visits and thematic work looking to proactively identify risk in the firm s business model; leading supervision projects and cases, including industry redress schemes. Industry: Chris has previously worked at Barings Asset Management and International Financial Data Services (IFDS). Chris also has a first class honours degree in Management Economics. Profile: Andrew is Managing Director of TCC Advisory Services with over 25 years experience in regulated firms, including 7 years FSA/FCA experience in firm and thematic supervision TCC: Client engagements have included delivery and oversight of governance, risk management and compliance reviews and the development and implementation of remediation plans; assessment of firms readiness for FCA-style supervision and management of conduct risk; assessments of compliance with the FCA s guidance on provider/distributor arrangements; fund manager authorisations. FCA: Team manager and lead supervisor for a number of large and mediumsized asset managers under the FSA and FCA s supervisory models. Work included firm specific risk assessments of asset managers governance and risk management arrangements, systems and controls, policies and procedures and prudential risk management, change in control assessments, oversight of remedial work, assessment of outsourced arrangements and investigation of conduct related issues in the sector. Industry: Andrew s other previous experience includes roles in asset management and life and pensions organisations. TCC Asset Management 13

14 asset management team sarah barton-white Regulatory Consultant The Asset Management Team is led by senior regulatory consultant Chris Martin. Get in touch with him on to arrange a meeting to discuss your individual requirements. judith wright Associate Director Profile: Sarah is a Regulatory Consultant, with previous portfolio compliance experience at a top investment bank. TCC: Client engagements have included advising firms on new and existing regulatory requirements including action plans for how firm s can adapt and ensure compliance with new regulatory requirements; system and controls assessments, change implementation projects looking to redesign global compliance models, the design and build of compliance procedures, policies and manuals, investment guideline monitoring oversight, compliance monitoring arrangements and risk management assessments. Industry: Sarah worked at Goldman Sachs as a Senior Compliance Analyst, first in their central Regulatory Team and then in the Asset Management Compliance Advisory Team supporting the front office. Sarah s work included handling trading errors and guideline breaches, pre- and posttrade compliance support (guideline queries, new issues, restricted list, best execution, fair allocation, cross-trades), product launches and desk/product reviews. Profile: Judith is an Associate Director of TCC Advisory Services with over 20 years financial services experience, including 7 years in compliance monitoring and policy roles at asset managers. TCC: Client engagements have included detailed assessments of asset mangers compliance functions, governance and systems and controls, including full conduct risk assessments and working with the business to implement regulatory change; in-depth reviews of asset manager s policies and procedures, including outsourcing arrangements, Committee ToR, development of the Compliance Manual, setting of the compliance monitoring plan and audit work to cover the whole business from the front to back office. Industry: Judith was a Compliance Policy Manager at a global asset manager and prior to that was a Compliance Officer at another global asset manager. Judith has held additional roles in wealth management, discretionary fund management and financial advice. Judith also holds a law degree. Sarah has a legal qualification (GDL) from BPP Law School and a BA from University College London. TCC Asset Management 14

15 Head Office The Consulting Consortium Ltd 6th Floor 10 Lower Thames Street London EC3R 6EN Tel: +44 (0) UK Operations Centre The Consulting Consortium Ltd 1 Broadgate The Headrow Leeds West Yorkshire LS1 8EQ Tel: +44 (0) Fax: +44 (0) This document was produced by The Consulting Consortium Ltd 2015 TCC Asset Management 15