NeMa: Industry backs AFME due diligence strategy
16 June 2016 Dubrovnik
Image: Shutterstock
Banks and sub-custodians generally back the move to introduce a standardised due diligence questionnaire, devised by the Association for Financial Markets in Europe (AFME).
According to speakers at NeMa, while distributing and completing the questionnaire will be difficult in the short term, it will get easier with time, and will bring benefits to everyone involved.
When banks were asked if they would be comfortable using a standard questionnaire, 86 percent said they would. This figure was 88 percent among those who would have to respond.
One speaker, Sara-Jane Baker of UBS, noted that while some institutions may question whether the questionnaire captures all of the information they need, she stressed that it is “very, very thorough”, and devised with collaboration with banks and considering the needs of various jurisdictions.
Sharon Hunt of Barclays added that, once respondents have established which sections of the questionnaire are relevant to them, responding will become easier year-on-year. She added, however, that it will only work if all parties are on board.
Hunt also noted that technology could prove helpful in this space. As some questions will require answers to be updated or reviewed, “there’s a market for that but it has to be at the right price.”
Baker agreed with this, pointing out that the industry is under significant cost restraints already, and constantly trying to improve efficiency. As the process is beneficial to everyone, she said, the cost should not be borne by just one side.
Another panellist, Jim Micklethwaite of Thomas Murray Data Services, added that having an established questionnaire is only half the battle, and that efficient responses and reactions to changes will be challenge.
He added that, although AFME is working with other organisations to develop similar industry initiatives in areas such as prime brokerage and depository banks, the first thing to do is to make sure “that this works before we press on to anything else”.
According to speakers at NeMa, while distributing and completing the questionnaire will be difficult in the short term, it will get easier with time, and will bring benefits to everyone involved.
When banks were asked if they would be comfortable using a standard questionnaire, 86 percent said they would. This figure was 88 percent among those who would have to respond.
One speaker, Sara-Jane Baker of UBS, noted that while some institutions may question whether the questionnaire captures all of the information they need, she stressed that it is “very, very thorough”, and devised with collaboration with banks and considering the needs of various jurisdictions.
Sharon Hunt of Barclays added that, once respondents have established which sections of the questionnaire are relevant to them, responding will become easier year-on-year. She added, however, that it will only work if all parties are on board.
Hunt also noted that technology could prove helpful in this space. As some questions will require answers to be updated or reviewed, “there’s a market for that but it has to be at the right price.”
Baker agreed with this, pointing out that the industry is under significant cost restraints already, and constantly trying to improve efficiency. As the process is beneficial to everyone, she said, the cost should not be borne by just one side.
Another panellist, Jim Micklethwaite of Thomas Murray Data Services, added that having an established questionnaire is only half the battle, and that efficient responses and reactions to changes will be challenge.
He added that, although AFME is working with other organisations to develop similar industry initiatives in areas such as prime brokerage and depository banks, the first thing to do is to make sure “that this works before we press on to anything else”.
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