Solvency II no fun for funds-of-funds
23 February 2016 London
Image: Shutterstock
Gathering accurate look-through data on funds-of-funds investments will be the next major challenge for investors and assets managers in complying with Solvency II, according to Silverfinch.
In its 2015 review the look-though data utility suggested that asset managers are facing increasing pressure from insurers to help them meet the look-though demands of Solvency II for funds of funds.
The review argued that “the vast majority” of the 5,000 regulated insurance firms in Europe have not yet started to engage with fund managers on collection of asset data. It also said: “Models have been tested with out-of-date and incomplete information.”
However, the report also noted two 2015 developments that could help asset managers and insurers in preparing for regular delivery of look-through investment data.
One was the new pan-European tripartite data exchange template, which creates a single standard template for organisations across Europe to work from, and another was the firm’s own legal and non-disclosure agreement, which intends to provide legal certainty that data is treated as confidential.
John Dowdall, managing director of Silverfinch, drew attention to the steep increase in adopters of Silverfinch technology in 2015, pointing out that of the top 50 global cross-border asset managers, 49 now have insurer clients using the technology, with 10 percent ready for live delivery.
Dowdall said: “Looking ahead, fund of funds has proved to be a particularly tricky issue for the market to address. The requirement to source look-through on multi-manager and fund of funds structures is clearly defined in the Solvency II regulation. This issue will be stage two of the Solvency II journey and we should expect it to come knocking on doors in the near future.”
“In early 2016, we are seeing intense pressure to complete the collection of robust, granular and accurate look-through data. That pressure may not dispel as rapidly as the industry originally thought. There are still many snagging issues to manage.”
In its 2015 review the look-though data utility suggested that asset managers are facing increasing pressure from insurers to help them meet the look-though demands of Solvency II for funds of funds.
The review argued that “the vast majority” of the 5,000 regulated insurance firms in Europe have not yet started to engage with fund managers on collection of asset data. It also said: “Models have been tested with out-of-date and incomplete information.”
However, the report also noted two 2015 developments that could help asset managers and insurers in preparing for regular delivery of look-through investment data.
One was the new pan-European tripartite data exchange template, which creates a single standard template for organisations across Europe to work from, and another was the firm’s own legal and non-disclosure agreement, which intends to provide legal certainty that data is treated as confidential.
John Dowdall, managing director of Silverfinch, drew attention to the steep increase in adopters of Silverfinch technology in 2015, pointing out that of the top 50 global cross-border asset managers, 49 now have insurer clients using the technology, with 10 percent ready for live delivery.
Dowdall said: “Looking ahead, fund of funds has proved to be a particularly tricky issue for the market to address. The requirement to source look-through on multi-manager and fund of funds structures is clearly defined in the Solvency II regulation. This issue will be stage two of the Solvency II journey and we should expect it to come knocking on doors in the near future.”
“In early 2016, we are seeing intense pressure to complete the collection of robust, granular and accurate look-through data. That pressure may not dispel as rapidly as the industry originally thought. There are still many snagging issues to manage.”
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