There are a number of clearly deﬁned rules and regulations that you need to abide by when it comes to your research as laid out in the Investment Advisors Act of 1940.
Applying the principle of a single digital record of all your research assets and activity is vitally important to your ability to demonstrate the due care taken to support your fiduciary duties for a reasonable, independent basis for recommendations. And for all other research compliance requirements stipulated by the SEC and other global regulatory authorities too for that matter, from Books & Records and Compliance Procedures to Regulatory S-P and more.
Your fund’s Research Management Solution, for example, should help you adhere to regulations under SEC Rule 204-2 for Investment Research and Electronic Record keeping, SEC Rule 206(4)-7, also known as the Compliance Rule, and more, and all the best practice that goes alongside it.
So, we’ve compiled a short paper that looks at the industry compliance fundamentals that should form part of any fund research technology project. You can use the checklist as a guide to help ensure your research management technology and processes a) meet mandatory regulations as they relate to investment research management and b) follow proven best practices that can help support competitive advantage. Let’s get started…
The Three Research Management Essentials for Industry Compliance
Compliance is often one of the key drivers for investing in a formal research management system. Which means funds no longer settle for anything less than a compliant foundation from the outset, and now expect RMS to have “built-in” compliance capabilities to meet today’s regulations.
However, when it comes to research and idea generation, you can’t afford for compliance procedures to restrict analyst performance. The right RMS will not only satisfy research compliance demands for your fund, it should also support analyst workﬂows, enhance productivity and make the process of maintaining compliance at the research-level easier than ever before.
You shouldn’t have to worry about tracking silos of research repositories across multiple systems, spending hours on discovery requests, audits or complex reporting, let alone clamping down on analysts’ use of non-compliant consumer apps.
At its most simple, there are three key research management compliance areas of particular focus:
- Meet (and anticipate) industry compliance regulations
- Simplify compliance processes, auditing and reporting
- Enable (rather than restrict) investment professionals
But of course, industry compliance is not that simple. We know that. So we’ve compiled this checklist across these three areas, including the required SEC regulations as they relate to investment research.
This checklist is not intended to be exhaustive of all regulations – Cybersecurity, GDPR, and MiFID II oversight are, for example other critical areas that we look at in separate materials – but it aims to provide insight into some key assessment areas, including:
- Electronic Record keeping
- Data Management
- Communications Monitoring and Controls
- Visibility and Control
- On Demand Data Retrieval
- Audit Trials and Productivity
You can download the best practice guide here – Investment Management RMS: A Compliance Checklist.