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Blog: Innovation for PRIIPs: SaaS improves compliance in asset management

Johannes Waldheim, Leiter IT & Solutions from acarda

It is as yet unclear whether the European Market Supervisory Authority (ESMA) will realize its intended adjustments to the financial market directive MiFid II/MiFIR for this year despite the Corona pandemic. However, an adjustment to the PRIIPs regulation for packaged retail and insurance-based investment products seems certain. In the long term, no slowdown in regulatory dynamics for asset managers is to be expected.

In the era of Covid-19, Those who have fulfilled their reporting and information obligations until now with an in-house solution based on MS Excel, for example, are usually unable to guarantee secure remote access to a central regulatory database. This makes working from home, which is currently strongly recommended in order to protect against infection, almost impossible.

Flexibility – even beyond the crisis

The situation looks quite different when all regulatory applications for reporting are obtained from the cloud as a web-based Software as a Service (SaaS). Here, location-independent access via encrypted channels is part of the basic concept. The resulting flexibility in work organisation pays off both in times of crisis and beyond. In addition, a consolidated database means that different reporting tools for different regulatory requirements can be combined in the cloud. The expense of double and multiple entries, which almost inevitably go hand in hand with distributed data storage, is eliminated; this leads to higher data quality. Last but not least, the central cloud model relieves the burden of constantly adapting reporting software to changing compliance requirements, as this task is done externally in the background in the SaaS model. The heterogeneous methodology used to calculate costs illustrates how large the expenditure saved can be. To calculate transaction costs, for example, detailed cost data for MiFid II and PRIIPs must be made available.

Although standardised templates like EMT and EPT are available as exchange formats for both MiFid and PRIIPs, large differences in the configuration and calculation of these templates can be observed across Europe. Currently, a range of regulations according to UCITS, PRIIPS or MiFid II are still applicable which can lead to both favourable and unfavourable results with regard to costs. So, for example, implicit transaction costs could either be determined using the new PRIIPs basis point estimation method or using the arrival price/full PRIIPs method. No less complex are the calculation methods in the context of the Cost Transparency Initiative (CTI) and the DC Workplace Pension Templates (DCPT).

In general, such subtleties in regulatory reporting require specific know-how that is always kept up to date; something which probably only very few asset managers possess — especially since, depending on fund composition, in addition to PRIIPs and MiFid II/MiFIR they may also have to meet the no-less-demanding Solvency II or CRR requirements.

In this context, the cloud model not only saves the expense of software adaptation and know-how acquisition, but its standardisation also improves the internal workflow for the collection and aggregation of all reportable information.

However, be aware: even an external cloud can only reduce complexity if regulatory services can be differentiated granularly and different reports can be put together flexibly. This requires a smart combination of microservice and data lake approaches that enable a fast response across multiple data sources; for example, an additional Solvency II module is required when insurance companies themselves also invest in funds. Flexible service selection provides access not only to a mechanism for calculating transaction costs, but also to an SCR calculation module based on the same data stock, i.e. without any increase in complexity. A centrally unified database of reusable regulatory information can be accessed at any time via the cloud, making the “data graves” of distributed in-house systems a thing of the past. The SaaS model strengthens compliance capability in asset management not only in times of crisis, therefore, but in every season.

More news…

New standards for PRIIPs-KIDs as of July 01, 2022

According to information from the German Investment and Asset Management Association (BVI) dated May 21, 2021, the EU Commission plans to delay the start of PRIIPs-KIDsby six months. A package of measures, which will include not only technical adjustments to Level 2 but also a selective amendment to the Level 1 Regulation, is to be forwarded by the EU Commission to the EU Parliament and Council before the end of June 2021.

More

ESMA updates its FAQs on AIFMD

On 28th May 2021, ESMA published an update on its FAQ on the application of the Alternative Investment Fund Managers Directive (AIFMD).
Three new questions related to Annex IV reporting were added to the document. In the Section III question number 84, 85 and 86, ESMA provided detailed explanations and examples on the reporting obligation of NET DV01, NET CS01 and NET Equity Delta of the AIF.

More

acarda adds InReg for increased European regulatory monitoring

acarda, a leading European RegTech company and part of LPA Group, has announced a coorperation with InReg, a regulatory maintenance provider that specialises in monitoring changes occurring within the regulatory updates for the asset management and life insurance sectors.

More

New standards for PRIIPs-KIDs as of July 01, 2022

According to information from the German Investment and Asset Management Association (BVI) dated May 21, 2021, the EU Commission plans to delay the start of PRIIPs-KIDsby six months. A package of measures, which will include not only technical adjustments to Level 2 but also a selective amendment to the Level 1 Regulation, is to be forwarded by the EU Commission to the EU Parliament and Council before the end of June 2021.

More

ESMA updates its FAQs on AIFMD

On 28th May 2021, ESMA published an update on its FAQ on the application of the Alternative Investment Fund Managers Directive (AIFMD).
Three new questions related to Annex IV reporting were added to the document. In the Section III question number 84, 85 and 86, ESMA provided detailed explanations and examples on the reporting obligation of NET DV01, NET CS01 and NET Equity Delta of the AIF.

More

acarda adds InReg for increased European regulatory monitoring

acarda, a leading European RegTech company and part of LPA Group, has announced a coorperation with InReg, a regulatory maintenance provider that specialises in monitoring changes occurring within the regulatory updates for the asset management and life insurance sectors.

More

acarda receives ISO certification for information security

acarda has successfully passed this year’s certification audit in accordance with ISO 27001 for the scope “Software development and operation of SaaS solutions for the reporting of private and investment funds”.

More

ESMA calls for improvement of data quality in AIFMD reporting.

On 8th April the European Securities and Markets Authority (ESMA) published the annual statistical report on EU Alternative investment funds2. In the report, ESMA calls for improvement of the data quality in the Annex IV reporting. In addition, the reports calls for the follow-up of the improvement of the Alternative Investment Fund Managers Directive (AIFMD) by the European Commission, which was initiated in August 2020.

More

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