Investment Compliance Monitoring

What is investment compliance monitoring?

Investment compliance monitoring is a key responsibility of investment teams and portfolio managers. They must ensure their portfolios stay compliant with regulatory requirements as well as any policies set in place by board committees, clients, or the organizations for which they manage investments.

These policies outline objectives, strategies, appetite for risk, and the types of securities and investments that organizations have outlined as allowed and not allowed. It is the investment manager’s job to monitor and act if an investment is in violation of any of the regulations or policies mentioned above. Why is investment compliance monitoring important?

Proactive investment compliance monitoring is crucial to ensure managers are following increasing regulatory guidelines from the NAIC, Solvency II, Lloyd’s, IFRS, GASB, RBC, and other regulations, to mitigate risk and avoid large fines. These organizations often change their policies so staying on top of these changes and the impact to your accounting practices requires diligence. If a violation is discovered, the quicker it can be resolved, the better. This can minimize financial and legal consequences for both the investment managers and the clients they serve.

Investment managers not only require the ability to review compliance reports daily, but they also need to ensure the data is aggregated, reconciled, and validated to be able to efficiently allocate funds and evaluate where they stand. Clearwater Analytics uses the same set of reconciled data across all types of reporting; accounting, compliance, performance, and risk – eliminating the need to use multiple systems for your daily work.

In addition, environmental, social, and governance (ESG) investing is estimated to continue growing by 30% through 2025 and is projected to consist of more than a third of the expected total global assets under management. This prediction is a signal that investment managers need to evaluate their current systems to ensure they’re capable of adequately reporting on ESG assets and following ESG guidelines.


How does Clearwater Analytics help?

When it comes to investment compliance monitoring, Clearwater provides actionable, up-to-date information and reports regarding portfolio compliance on a daily basis. The compliance reporting available on our web-based platform is fully integrated with your accounting book of record, making it easy to track any violations back to the lot-level of your general ledger. Clearwater implements the logic for new rules with the software platform, saving our clients’ teams valuable time which they can use to focus on value-added tasks instead of updating regulations.

Our integrated reporting model enables you to toggle reporting views across multiple accounts, managers, or business units. Clearwater Analytics users can set custom controls to monitor compliance according to their investment policies and standard regulations, including ESG policies. All investment activity is checked against those controls daily and tracked at the security and lot-levels.

Compliance can be tracked across multiple policies, and notifications are automatically sent if there is a violation. Any compliance policy changes, or resolutions can also be documented and referenced for internal audits. Users are also able to resolve violations and add applicable notes that can be referenced for internal audits directly into the system. With this information, investment managers can act quickly and confidently to resolve any compliance issues.

Clearwater Analytics also has dedicated teams that proactively track and implement regulatory changes on an ongoing basis. These updates are passed on to clients, often months before the change goes into effect, and include how they might affect current compliance and accounting practices.

Learn more about how Clearwater Analytics can help consolidate your compliance reporting into a single, audit-quality platform by scheduling time to speak to an expert today.