Ashley Smith, Silverfinch in conversation with ISS

Ashley Smith, SVP Business Development at Silverfinch talks about MiFID, PRIIPS and how Silverfinch can help the buy-side.

Silverfinch was launched twenty-something years ago as a fund analytics company, but then the focus moved to data management for asset managers.  Blue chip asset managers would put their underlying product information in our repository for their fact sheets etc. Recently, all these ways of managing data have been hijacked by the managed data for regulation.  This is the asset manager side now.  Not only the asset manager’s own regulations but client regulations. PRIIPs, MiFID, etc.  We’ve been client led into being a regulatory data management hub. We’ve got PRIIPS data environments built and configured and our clients are beginning to think about how they’re going to test into that.  We drive the adoption of all the standard industry templates that you’ll be familiar with.  That’s the way forward as far as we’re concerned.

In the MiFID space, we’re being told by our clients, again the blue-chip asset managers, that if they solve their immediate needs for PRIIPS, it gets them two or three steps towards MiFID.  Cost and charges, trade and transaction reporting and transaction cost analysis is better defined in PRIIPS than we’re seeing in MiFID.  They’re building for PRIIPS on the hope that that will be reused for MiFID, although it hasn’t really been defined in that MiFID space yet.  We encourage clients to just do this once and then they can re-use the data as many times as required. If you dig a hole in the road you might as well drop two cables in as one. That seems pragmatic to me and it’s how our industry has always worked.  Can we take one action and re-use it for three regulations, and even to influence those regulations that haven’t yet quite decided how they’re going to do transaction cost analysis?  Once we’ve got things defined in PRIIPS, what’s wrong with using the same methodology in MiFID?  So rather than just react, we’d rather be proactive and say, as an operational entity working with institutional investors, asset managers, distributors, wealth managers, that it makes sense for us to drive this on a common approach from a data standpoint.  We build underlying data sets that feed all these regulations.  That’s kept us busy.  MiFID and PRIIPS arriving at the same time is causing headaches.  They don’t necessarily match up eye to eye.  Even more challenges we see for some of our clients dealing with someone like the wealth management platform that this is brand new to them and they’re not quite sure how to approach it.  We’re in the middle of all that.  We’re just putting all these things together.  We’ll build the data sets.  You tell us how it needs to be used.

I don’t think anyone’s ready. MiFID has got the same go live date as PRIIPS.  That’s the headache.  MiFID has had a longer trail into it, so it’s a little bit more understood on the best execution side and all those things.  Again, as with many of these regulations, the data and the reporting of data seems to be an eleventh hour consideration.  We’re trying to change that and say, ‘We’ve got all this data already and we use it for regulations, for a regulator, so it’s probably fit for purpose.’  That’s how we take a pragmatic approach to reusing that stuff and just taking time and spend out of the industry.  Why do you need to build two programmes that calculate the same thing two different ways for two regulations?  All it’s doing is hitting fees, costs and investor returns. That’s our model really. We’re not trying to make it any more complicated than that.  We don’t want to put any bells and whistles around it.  It’s about getting the data right, get it clean, get it distributed.

The Silverfinch Solution is standard in, standard out.  It’s purely a utility framework for the transport of this regulatory data.  If there is non-standard needed, or if you’ve got a legacy piece of architecture, you need to build data before it goes into it, that’s when the data management capabilities, the Accudelta side comes in. We’re increasingly seeing that the user wants both one to do the build and one to do the distribution.  It depends on individual architecture as to whether you’ve got the data ready on an in-house programme, or you need some assistance building it. If that’s the case you can just swap data between the two of them.  It’s either you have the data ready and you just need to exchange it. A number of managers are building their own in-house programmes in which case we work with their data.  Where you don’t, or there’s a bunch of calculations on the MiFID and the PRIIPS side, particularly with MiFID on transaction costs, and trade and transaction reporting and product governance target market definitions, there’s a lot of work to be done now and we’re seeing a lot of potential for that to be outsourced to us.  Even an in-house build shop with the scale of something like a MiFID, is just too much to do in the time that’s there.  You have to think of the bits you can get experts to do and then keep the rest of it back for you to do yourself.  That’s the space that we’re kicking around in.