Does Outsourcing have a Place in Your Regulatory Strategy?

January 18, 2012

Last month I attended the FSO Knowledge Exchange conference “Asset Management Industry Transformation & Outsourcing Strategies Forum”.  The conference focused on emerging trends, operational strategies and latest technologies for the investment industry.  This year heavy emphasis was placed on the regulatory environment in the asset management industry and the challenges this creates for operations teams.   

As the various panelists discussed the different aspects of regulations and how they will affect business practices, one thing was certain – nobody is certain what specific changes need to happen and when. On this subject, one of the most interesting panels was Outsourcing & Regulatory Compliance: A Match Made in Heaven?, where the role of outsourcing in complying with regulations was debated. As I listened to both sides, it became obvious that outsourcing can and should be an integral part of  a company’s regulatory strategy and needs to be considered as any asset management firm maps out their short and long-term plans. 

As we have discussed before in blogs (See “Outsourcing – It’s Not Just for Cost Reduction Anymore), the thinking about outsourcing has evolved beyond a “cost reduction strategy”.  Outsourcing the appropriate functions in the middle-to-back office not only allows firms to reallocate resources and potentially reduce cost, but it also makes companies more agile, competitive and compliant.  When thinking about regulatory change, there will be many aspects of your business that will need to change and adapt in order to comply.  By outsourcing parts of your operation, such as non-differentiated parts of the middle-to-back office, you can focus on the components of the regulations that need tighter in-house control and oversight.

To help firms address the changing regulatory environment, PORTIA Outsourcing Services is staffed with a team of product and industry experts that are constantly reviewing regulatory changes and amendments to ensure our underlying system and processes are compliant with the appropriate regulations.  Also our Outsourcing Services team maintains SSAE16 (formerly SAS70 Type II) audit of its operational and technical controls. SSAE16 is an auditing standard developed by the American Institute of Certified Public Accountants, which sets guidelines for auditors to use in order to fairly and objectively assess the internal controls of service organizations.  This certification ensures our services are continually monitored and regulated.

Underlying our Outsourcing Services are flexible software solutions that help clients adapt to and address regulations as they are defined.  For example, using user defined security master file and transaction file, the system is ready to  accommodate unique counterparty identifiers to adhere to LEI rules, as they are identified.  In addition, our advanced reporting capabilities are customizable to provide transparency for Dodd-Frank and other regulations, and our solutions can even handle the potential break-up / redenomination of the Euro (see upcoming blog for more details on this).

As your organization is winding through the myriad of regulations and determining how to implement and comply with all the changes, you should consider whether outsourcing portions of these functions will help you adhere to policies in the most efficient manner.   Where do you think outsourcing will best lend itself in the aggressive regulatory environment we are now living in?

We invite you to learn more about PORTIA Outsourcing Services and outsourcing best practices at the Mitigating Outsourcing Risks in Banking and Finance: How to Manage Vendors Webinar sponsored by The Knowledge Congress.  The webinar will be held on March 1st 12-2:00pm EST.  Click here for further information and to register (with a discounted registration fee courtesy of PORTIA Outsourcing Services).

 – Dan Schlossberg, Director of  PORTIA Outsourcing Services


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