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Confluence Committed to Helping Fund Industry Meet The SEC’s Newly Adopted Investment Company Reporting Modernization

October 14, 2016

The U.S. Securities and Exchange Commission (SEC) voted yesterday to adopt new rules and forms, and amendments to certain rules and forms to modernize the reporting of information by registered investment companies. The new rules require funds to report new data to help the SEC evaluate funds' impact on systemic risk and to inform examinations and rule making. The rules will also create new standards for preparing financial statements. The SEC did not vote on Rule 30e-3, which permits funds to default to electronic delivery of financial statements. It is expected that there will be an update on Rule 30e-3 by year end.

The SEC did not modify the proposal's compliance periods. Form N-PORT and Form N-CEN will have a compliance date of June 1, 2018 and the Regulation S-X changes will have a compliance date of August 1, 2017. While there were no major surprises in the final rule, each of its components is expected to have a significant operational impact on fund managers and administrators.

The most significant of the three components is Form N-PORT, which will require '40 Act registered, non-money market funds to source, validate and report information about their portfolio holdings to the SEC on a monthly basis and disclose to the public quarterly on a 60-day lag.

"Confluence has been preparing for SEC Modernization since early 2014, revamping our infrastructure to deal with systemic risk reporting, and evaluating the unique challenges presented by each component of this rule," said Paul Soltis, Global Market Manager at Confluence. "Now we have clarity on what this means for the industry, and we are uniquely positioned to minimize the operational impact of these new requirements."

The two other components of the SEC Modernization rules are:

  • Form N-CEN replaces Form N-SAR to report what the SEC refers to as "census information," mostly static information on the fund such as the fund's auditor or how the fund is registered. It is filed annually within 75 days of the fund's fiscal year end.
  • Additional derivatives disclosures, consistent with Form N-PORT disclosures, are now required by Regulation S-X, which prescribes the standard that '40 Act registered funds must follow when preparing their financial statements.

In May, Confluence launched its Unity NXT™ Regulatory Reporting platform, powered by Synapse™ data management, to support the new data required by SEC Modernization. The platform will be available for setup approximately nine months before the first filing date. Among the features Confluence's solution will address are:

  • Filing solutions for Form N-PORT and Form N-CEN through the Unity NXT Regulatory Reporting platform
  • Unity® Financial Reporting support for the Regulation S-X changes
  • Sophisticated data sharing between Confluence solutions
  • Regulatory remediation to determine data sources and ongoing data collection procedures
  • Ongoing form preparation and filing services to ease the new resource burden
  • A full end-to-end solution under a single offering via partnerships with market data providers and risk management specialists

Upon confirmation of compliance dates, Confluence will distribute a timeline of expected future development releases.

About Confluence

Confluence is a global technology solutions provider delivering innovative products to the worldwide money management industry, to meet asset managers’ and service providers’ performance, reporting, analytics, risk and data needs. With the recent acquisition of StatPro, Confluence offers its clients a broader range of data-driven managed investment solutions including post-trade regulatory and shareholder reporting, performance and attribution, portfolio analytics, and asset data services and data management, delivering a full technology suite to the front, middle and back office. Headquartered in Pittsburgh, PA, Confluence serves the international fund industry with locations across Europe, North America, South Africa, Australia and Asia.

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