A Perfect Fit for All Regulatory Compliances - Apollo Asset Management

Integration into compliance: The management of constraints is at the heart of Asset Management business. Companies are usually very demanding on this issue because it is a main priority to the management.

DIFFERENT CLASSIFICATIONS OF CONSTRAINTS

There are multiple types of constraints. We list out some classifications of constraints below:

• The legal constraints to which the funds are submitted for the financial market authorities. We find this in the hub of the control ratios or the constraints of exposure to issuers such as the 5-10-40% rule.
• Statutory constraints involve the legal nature of portfolios, such as the restriction on ‘share saving plan’ type of portfolios or geopolitical embargoes. We can also integrate type FACTA / IRS controls, section 871M or the issue of customer data protection (GDPR).
• Contractual constraints which relates to the restrictions imposed by the manager or the type of fund. Within this perimeter, we find constraints relating to asset allocation, management themes, and areas of activity to be allowed or prohibited.
• Institutional constraints which are often imposed by Asset management companies to secure funds. Among these types of constraints, we could, for example, define rules prohibiting certain issuers regarding ratings or certain assets that the investment company does not wish to position.

BEYOND THESE, THE CONSTRAINTS CAN BE POSITIONED AT DIFFERENT LEVELS. THEREFORE, DIFFERENT TYPES OF CONSTRAINTS ARE DISTINGUISHED BELOW.

• The constraints on assets which are meant to prohibit a set of securities either by ISIN codes or by issuer or more generally in relation to a breakdown on an allocation structure. For example, this makes it possible, to prohibit constraints in relation to geographical areas or to asset classes.
• The constraints on transactions which lets you check conditions to activate the rules at the time of the pre-trade. For example, if a constraint is defined at the level of an issuer, only the issuer of the traded asset will be processed.
• Transverse constraints makes it possible to verify the rules on all positions in the portfolio. For example, a counterparty risk exposure rule will be treated by scanning all the counterparties with which the portfolio is checked in its open positions on over-the-counter contracts.
• Allocation constraints that are used when a model portfolio management mode is considered. In this context, the minimum and maximum thresholds per pocket are evaluated in order to ensure that the investment limits are respected.

Settings

Apollo Asset Management covers the broad spectrum of constraints by offering an architecture paramétrage configurated with qualitative levels of severity; because banks must be able to constantly adapt. Apollo Asset Management solution is scalable, it helps the manager to quickly go through his own management constraints, it assists the Middle Office to maintain customer constraints and it lets asset management companies to define specific constraints for their establishments.

In addition, our solutions are equipped with a complete audit trail granting the status of the present rules in force on current portfolios or at a retroactive date to be monitored at any time. They provide detailed monitoring of arbitration decisions made by advisers and decisions made by clients.

Des Constraints libraries can thus be implemented and deployed on managed portfolios and funds. About regulatory constraints, we provide standard kits for compliance with international requirements. In this context, UCITS constraint kits for each country are available and applicable for all funds with standardized settings and in accordance with the regulations in force. MODE D’ÉVALUATION DES CONTRAINTES

CONSTRAINTS EVALUATION MODE

Apart the configuration, which is predominant in the pre-tradecompliance and management. Apollo Asset Management Software provides verification and traceability of all constraints for audit and control purposes. The placing of orders may be blocked or subject to approval in the event of non-compliance with the rules. Thus, respect for compliance is always at the center of the portfolio management system. Rules that pass during the day may a few days later no longer be respected, for example due to price variations amplifying or reducing exposure. This is where post-trade takes center stage.

In addition, post-trade constraints are checked every evening by batch, and monitoring reports are sent to the units in charge of compliance management and risk control. In the event of a violation of post-trade constraints, workflow mechanisms are activated between internal control and management in order to trace and resolve rule violations.

Conclusion

For all these challenges, Apollo Asset management Solutions responds with an exceptional level of requirements and excellent response times thanks to its technical architecture on calculation servers adapted to these issues.