Princeton Financial Systems, a global leader in providing accounting, compliance and reporting solutions to the investment industry, has introduced enhancements to its MIG21 LawCard Solution to enable clients in the European market to address UCITS IV (Undertakings for Collective Investments in Transferable Securities) regulatory changes.
LawCards provide clients with a comprehensive library of predefined rule sets for the Princeton Financial Systems' MIG21 compliance solution.
Working closely with clients managing large, complex portfolios, Princeton Financial Systems identified key challenges associated with the implementation of UCITS IV. Then, synthesizing feedback from Princeton's compliance officer roundtables, a best practice the firm has been leveraging for several years, Princeton developed new UCITS IV rule sets for MIG21 LawCards and assisted clients with the implementation.
"Our dedicated LawCard team tackles complex compliance challenges around the world from our clients' perspective," noted Peter Trabert, Head of LawCards. "That means not only ensuring our MIG21 LawCard solution addresses current rules so clients can launch funds in new legal jurisdictions without excessive overhead costs or delays, but also anticipating future issues so we can be at our clients' side whenever they meet new regulatory challenges or have questions concerning financial instruments."
Some of the more complex UCITS IV issues identified from an implementation standpoint were related to calculating Global Risk Exposure, the Sensitivity Approach to bonds and interest rate portfolios, the investment restrictions for volatility and variance swaps (CESR 10-788), and the "Common Definition of Money Market Funds" (CESR 10-049). Princeton Financial Systems created and implemented rules for the MIG21 LawCards to address:
• Calculating a fund's level of leverage - MIG21 LawCards allow for calculating the leverage with either the "Commitment Approach" or the "Sum of Notionals Method".
• The Sensitivity Approach to bonds and interest rate portfolios - MIG21 LawCards introduced specific functionality to reduce some of the complexity surrounding this issue and provide guidance when calculating the Global Risk Exposure using the Commitment Approach.
• CESR Guideline 10-049 - This document defines investment restrictions as part of UCITS IV. MIG21 LawCards consider derivatives appropriately in weighted average maturity (WAM)/weighted average life (WAL) calculations required for money market funds.
• Calculation of economic exposure for swaps - MIG21 LawCards enable our clients to check their funds' compliance including volatility and variance swaps as defined in CESR 10-788.