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Perform dynamic compliance checks when distributing investment funds globally

  • Cross-Border
  • Fund Distribution
  • Asset Management

Achieve excellence in portfolio- and compliance management when distributing funds across borders. With dynamic fund distribution checks asset managers reduce risk and generate more revenues by matching investor demand globally and at scale.

Clients:

Partners:

Coverage
  • 100+ jurisdictions
  • 57 rules per country (avg.)
Scope
  • MiFID II (EU), UCITS, AIFM, FinSA
  • Dir. 2019/1160, Reg. 2019/1156 (EU)
  • and many more
Available via
  • API and App
Cross-Border Instruments

In which Asian countries can I proactively market our emerging markets funds to institutional clients?

Cross-Border Instruments

Am I allowed to offer a closed-ended mutual fund to a professional investor in Belgium?

Cross-Border Instruments

Can I provide fund subscription documents to a prospective client in Singapore?

Cross-Border Instruments

Can I discuss the performance of our investment offering with a client from Sweden even if some funds are not locally registered?

Cross-Border Instruments

Do additional restrictions apply if a retail client from Canada is requesting further information about our sustainability funds?

Cross-Border Instruments

Which type of funds - UCITS or AIFs - can be marketed through our distribution partners in Brazil?

Fund distribution for global investors today

Fund distribution has always been a key process for asset managers because even the best performing funds in the market have to be made available to investors and distribution partners to ensure a constant inflow of new assets. 

When distributing their investment funds globally, asset managers are exposed to complex regulatory issues which makes it difficult to be as productive and efficient as possible.

Due to the fact that fund distribution is a B2B activity, where asset managers are dealing with partners such as banks or institutional investors, legal and regulatory risks are sometimes underestimated. Some asset managers rely on their professional counterparties to take care of regulatory restrictions. This can be dangerous because institutional clients are the ones expecting excellence not only in portfolio- but also in compliance management.

In a paper-based compliance reality, asset managers are often evaluating regulatory requirements for distributing their products through lengthy and costly consultation processes with legal and compliance experts. Today’s fund distribution challenges can be summarized as follows:

  • Asset managers are clarifying regulatory restrictions around fund distribution on a case by cases basis through inefficient legal and compliance processes 
  • Institutional counterparties expect professional expertise on both level of investments and regulations 
  • Legal and compliance staff are struggling to obtain and interpret text-based regulatory information, negatively impacting the time to market and costs of their service.

The challenge of distributing funds internationally

Compliant fund distribution is a complex process which requires deep regulatory knowledge. It is essential for asset managers to keep track of the constantly changing regulations and legal requirements across jurisdictions. 

If you are an asset manager wishing to distribute an investment fund in a new jurisdiction, it is key to be aware under which local licensing or exemption regime you can operate. The laws governing fund distribution requirements are yet to be harmonised internationally. In fact, there are countries where fund distribution rules are so lax or loosely defined, that a common mistake for asset managers is to assume there are no rules at all, which exposes their clients and partners to risk. Other countries foresee less regulatory restrictions for certain client categories such as regulated entities or stipulate requirements on investment fund level such as registration requirements. Only for distributing mutual funds, there are 57 different regulatory rules per country on average. This makes the maintaining of all relevant rules a huge task for internal asset managers.

In a nutshell, the main blockers with fund distribution are:

  • Rapidly changing regulations. Staying compliant in the traditional analogue way becomes unsustainable for asset managers and their firms.
  • Complex investment structures. Mapping different fund types to jurisdiction-specific distribution requirements is massively increasing regulatory complexity.
  • Sophisticated expectations by investors. They expect trustworthy regulatory expertise and efficient distribution processes.

The way towards unlocking bandwidth is through the democratisation of the regulatory knowledge sharing and we are seeing some early signs of this transformation taking place. Institutions are shifting from manually obtaining paper-based legal opinions on a case by case basis, towards digital regulatory frameworks, sometimes even with third-party tools.

In the current landscape and depending on their strategy, asset managers can approach fund distribution in one of the following ways:

Business potential Risk minimisation Ease of use Instrument level checks
Not clarify country-specific rules + + +++ n/a
No international investors + +++ +++ n/a
Obtain text-based legal opinions +++ ++ ++ no
Conduct dynamic fund distribution checks ++++ ++++ ++++ yes

Getting started with with Dynamic fund distribution checks

Building and implementing an efficient fund distribution framework keeps asset managers compliant and with it – helps their bottom line and reputation. There are three pillars to introducing this in any asset management firm:

  • Digital fund distribution rules: firms need constant access to live updates of regulations. Going at it with machine-readable rules will guarantee easy crunching of the right information and keeping up with updates in real-time. 
  • A user-friendly UI such as an app or a white-label widget to provide both distribution teams and legal and compliance experts with fast access to the regulatory do’s and don’ts.
  • An API-first approach that delivers regulatory answers in all necessary channels – from internal tools such as a CRM or marketing material process to external tools accessible to customers or prospects.

Benefits of using dynamic fund distribution checks

  • Comprehensiveness: with dynamic fund distribution checks in place, asset managers can pro-actively compare different distribution scenarios and deliver alternative investment proposals with less regulatory restrictions.
  • Continuous compliance: asset managers access regulatory knowledge that’s maintained by trusted content providers and see up to 25 times fewer compliance breaches.
  • Flexibility: fund distribution checks can be served in different formats to make them fully accessible to business development teams – form an app UI to integrated API checks directly on asset management firms’ websites
  • Speed: dynamic fund distribution checks provide instant answers to complex offering scenarios, accelerating the time to market over 50 times.