Finding investment opportunities while remaining compliant in a volatile new world

January 12, 2021

When I meet regulatory and investment compliance officers in the asset management industry, I find they’re more concerned than ever about being prepared. They don’t sit passively while their investment teams strategize. Nor do they wait for market events or changes in account funding and then decide what to do about them. Instead, they plan ahead. And that means when a foreseeable event occurs, they’re ready with a plan of action.

Compliance teams have become a part of the offense and, equally, the backbone of the defense. One way they do this is by anticipating changes in advance. They work with the investment or risk teams and either guide the implementation of the changes or prepare for their effects on their portfolios.

I call this scenario testing. From the conversations I’ve been having, it’s clearly growing in importance and broadening in scope.

Scenario testing is increasingly critical to the overall success of the asset management business. However, for such an important activity, it’s inordinately manual and time-consuming.

In each case I’ve observed, firms are conducting an anticipatory compliance evaluation in one or more non-production environments. This comes with all the well-known headaches of trying to simulate live activity in a static test system. There has to be a better way.

Compliance teams need to find ways to use their systems, data, and expertise as offensive weapons alongside their traditional role as bulwarks of the defense. However, whether they’re playing offense or defense, one fact remains: preparing the best response so others can deploy it swiftly under pressure is surely a business differentiator worth pursuing.

The ION LatentZero compliance solution lets you do exactly that. With LatentZero, asset managers can perform advanced scenario simulations and embed them into individual compliance programs.

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