PRINCIPLES OF GLOBAL FUND REGISTRATION AND DISTRIBUTION: A COMPLETE GUIDE

Registering & distributing your funds across the globe

Overview of global fund registration

As a fund manager, you want to make your funds available to as many investors as possible. However, one of the biggest challenges is ensuring that your funds comply with the legal and regulatory requirements of each jurisdiction in which you want to make them available for sale.

Regulatory compliance is not the only challenge, the registration of a fund in just one country is a time consuming process. This is in addition to the time it takes to research how you can best position your investment proposition in front of your target investors.

Plus, as you may already know, each country’s fund registration process is completely different.

Luxembourg, which has the largest number of investment funds in the EU and second in the world, requires that you obtain a permit and comply with requirements set by the Commission de Surveillance du Secteur Financier (CSSF) and pay the one-off capital tax of €1250. You also need to set up a company that’s located and registered in Luxembourg.

Another example is in the UK. Here, you need to complete an application form relevant to the type of fund you want to establish and provide supporting documentation such as solicitor certificate and key information documents (KIDs) to the Financial Conduct Authority (FCA) and pay the application fee.

Regulatory requirements differ from country to country, even within the EU. Outside of the EU the differences between countries can be quite extreme. Satisfying these requirements and providing the documents in the required languages can all add to the length of time it takes to arrange your fund’s registration.

Considering the above, and the burdens and hurdles it can impose on your resources, plus the fact that you want your fund to be available across the world, you need to be able to streamline your global fund registration process as much as possible.

Fund data distribution: the next critical step

After registering your funds, the next critical step is to ensure that they are promoted and distributed effectively to investors. This will be different depending on which country you registered your fund.

Known as fund dissemination, most fund managers rely on a distribution network that includes commercial and private banks, independent financial advisers, fund platforms, and insurers. Some of these distribution channels will vary in terms of popularity from country to country.

According to a report by Platforum, fund platforms continue to be one of the most popular fund distribution channels across Europe, despite the value of assets of going in reverse due to recent economic uncertainty. This fall in asset value has triggered many platform providers to broaden their offering.

No matter your distribution channel, it’s crucial to swiftly and accurately share your fund information to your investors. The fund documentation that you produce for your investors should comply with the latest regulatory requirements to ensure they get the relevant information.

That said, one of the main challenges in distributing funds is ensuring that your fund data is accurate at various touch points. Mismanagement of fund data distribution can lead to damaging reputation to your financial institution and will lead to a fall in trust which is difficult to build back.

When promoting your new investment fund or an existing investment fund in a new territory, you need to set aside time and resources to make sure your fund data and documents are accurate and reliable. This can lead to large unwanted administrative overheads but it is vital that your vendors, and ultimately your investors, don’t end up with the wrong, incomplete or outdated fund information. Plus, your fund’s documents should be reliable, up to date and meet the local market requirements, including language, to successfully promote your fund. Not to forget, you need to find distribution partners to push your fund to your retail investors.

Indeed, fund management is increasingly becoming complex. With all the requirements that need to be met, you need to use an all encompassing Fund Data Management System (FDMS) such as Fund Information Hub (FIH). Not only does this type of solution assist you with fund registration, it also gives you access to a distribution network of banks, financial advisers, media publications and wealth managers, and access to an integrated solution for fund regulatory compliance.

Regulatory frameworks for global fund registration & distribution

Both global fund registration and fund distribution requires that you meet the regulatory requirements that have been specified by local market authorities for each country. Here are some of the key regulations to keep in mind:

• PRIIPs Regulation: The Packaged Retail and Insurance-based Investment Products Regulation (PRIIPs) is an EU regulation that requires investment products marketed to retail investors to be accompanied by a Key Investor Document (KID), a standardised document. The KID provides investors with key information about the product, such as its risks, costs, and performance.
• SFDR: The Sustainable Finance Disclosure Regulation (SFDR) is another EU regulation that requires fund managers to disclose how they integrate environmental, social, and governance (ESG) factors into their fund, using prescribed formats and templates. SFDR was recently updated in an effort to minimise allegations of greenwashing.
• TCFD: The Task Force on Climate-related Financial Disclosures (TCFD) is a global initiative that ensures fund managers disclose climate-related information that is associated with them as a company and their funds. The TCFD framework enables fund managers to identify, assess, and manage climaterelated risks and opportunities within their funds. It is important to note that the IFRS Foundation, which oversees the International Sustainability Standards Board (ISSB), will take over the monitoring of companies’ progress on climate-related disclosures from 2024.
• SDR: Sustainability Disclosure Requirement (SDR) is a regulatory framework that is being introduced by the FCA. This regulation prevents funds from being greenwashed through the introduction of product labelling, pre-contractual and periodic disclosures to ensure ongoing compliance.

While the above are some of the key regulations that you need to be aware of as a fund manager, it is imperative that you understand these and other regulations inside-out, while keeping up-to-date with any changes.

To help you stay on top of the changing regulatory environment, you need to have the right team in place to ensure your funds are fully compliant. This way, you’re able to stay ahead of new regulatory developments and be able to distribute accurate fund information to better inform investment decisions.

Why are these regulatory frameworks in place?

Key considerations and challenges for fund managers

Despite the good intentions of regulatory frameworks, there are a number of challenges that you need to keep in mind.

Managing static and dynamic fund data

As a fund manager, you need to store and manage both static and dynamic fund data. Static data includes information such as the fund’s name, objectives, and fees. Dynamic data includes information such as the fund’s performance and holdings. As you know, when there is a change in data, you need to update distributors and investors in a timely manner. When you have multiple distribution channels and touchpoints all over the world, this can be a significant administrative burden.

Keeping funds compliant post-registration

Making sure your funds are compliant on registration is only the first step. As the regulations will evolve, it is your responsibility to keep your funds fully compliant post registration. This will involve familiarising with the latest regulations and providing updated documentation and data to the regulatory body to maintain your registration status for compliant distribution and marketing in the target country.

Fund Documentation Production

With the introduction of the PRIIPs regulation, providing accurate KIDs to your investors is now mandatory. Depending on how many funds you manage, fund document production and distribution can take a great deal of time. Plus, if you’re producing these documents manually, there is risk of data inaccuracy. Ideally, you need a process in place that will help you produce reliable fund documents in a timely manner.

Ensuring data accuracy

When promoting your fund, it is imperative that your data and documentation is accurately distributed to various touchpoints. If your investors come across any fund data inaccuracy, it will damage your institutional reputation. You need to have the necessary quality assurance and data governance processes in place to ensure your fund data is accurate at the point of registration, distribution and at the point of sale.

Overheads

Managing and distributing funds can be a time-consuming and resource-intensive process. This can lead to large and unwanted overhead costs. This ultimately can impact your decision on registering a fund in another country.

How to streamline your fund registration and data distribution efforts

The above regulatory frameworks and challenges consume a great deal of time and resources, especially when it comes to fund registration and distribution.

With the intervention of digital technology, investors demand timely and accurate information on their device of choice. This is why it is critical for you to streamline the process in which you distribute and publish your fund data and documents.

One way to do this is to migrate to a Fund Data Management Solution (FDMS) such as Fund Information Hub (FIH).

What is a fund data management solution (FDMS)?

A FDMS is a FinTech solution that is supported by a team of experts to help you manage and streamline your fund registration and distribution processes. FDMSs can help fund managers to:

• Register funds globally: The experts behind the FDMS ensure your funds are compliant when registering them for cross-border fund distribution. They also provide support in maintaining them post-registration.
• Accurately distribute (disseminate) fund data and information: A FDMS can help you distribute fund information to investors in a timely and accurate manner.
• Promote your fund: In addition to fund dissemination, FDMS can unlock access to a wide network of distributors, banks, financial advisers, media publications and wealth managers. This saves you from having to find a reliable distribution network yourself so you can distribute and promote your fund straight away in your target markets.
• Produce accurate fund documentation: FDMS can assist with producing accurate fund documentation like KIDs/KIIDs. This is essential for complying with local market fund regulations so that investors have the information they need, in the right language, to make informed investment decisions.
• ESG and SFDR reporting: You can generate reports that are relevant to ESG and SFDR reporting. This can help you to comply with regulatory requirements and demonstrate your commitment to ESG and sustainability at a product-level.

5 Questions to ask a FDMS Provider

How does it distribute your fund data and documentation?

You want to eliminate errors from occurring in both your fund data and documentation when distributing them to investors. Be sure to familiarise with their processes to see how they keep your fund data and documentation accurate at all touch points.

How does it assist with global fund registration?

Ideally, you need a FDMS that enables you to streamline your global fund registration processes. That means, you need a solution that efficiently looks after obtaining and maintaining authorisation in your target markets for compliant fund distribution, promotion and marketing.

How does it comply with all the different regulations?

With regulation changing constantly, you need a service provider that is constantly ahead of the regulatory developments. You also want them to provide solutions that seamlessly integrate with your existing business processes, saving you from having to completely overhaul your existing system or operating model.

How does it integrate with my existing processes?

When you’re exploring a FDMS, you want this solution to seamlessly work well with your existing processes. The last thing you want is to change your operating model and internal processes, which can impact time-to-market for both fund registration and distribution. Make sure the FDMS provides you with the right support so you can integrate to the new system without causing many disruptions

How cost-effective is it?

You want a system that not only streamlines global fund registration and data distribution, but you want it to reduce overheads by a significant amount. While saving your team’s time in the process so that they can focus on core elements of your business, such as finding new fund investment opportunities and maintaining a strong relationship with your retail investors.

Why choose Fund Information Hub (FIH)?

Fund Information Hub (FIH) is a cloud-based portal by FE fundinfo. It acts as the central hub for all your fund data management and distribution operation applications, including fund registration, fund dissemination, as well as document production and fund distribution.

In addition, you get access to a team of consultants who can assist with fund registration in various countries as well as support in helping your fund meet regulatory requirements.

What’s more, Fund Information Hub includes a new feature, Loopback, which enables your fund information to be accurately distributed while providing efficient end-to-end reconciliation if data anomalies have been detected. When using My Data alongside Loopback, you have the ability to monitor and control the quality of your fund data when it’s transmitted to FE fundinfo and when it goes out to the market.

My Data

A fund usually generates a large volume of data that needs to be processed and distributed to various touchpoints. To ensure the accuracy of your fund’s data, you need to meticulously audit it, which can take a considerable amount of time and resources.

The My Data feature is a service that is built into FE fundinfo’s data management audit process that relieves the administrative burden for you. My Data helps with identifying anomalies prior to registration so you can review and rectify them on the spot, giving you more control over the quality of your data.

What is Loopback?

The Loopback service enables the Golden Source of Truth when it comes to fund data distribution. Essentially, it is a quality management service that enables your fund data to be distributed to your preferred distributors while ensuring your data maintains its accuracy.

This way, your fund’s data is consistently reliable and your organisation can maintain its reputation.

What’s more, when you have the option of distributing your data to your chosen channels, you have full control over who can access your fund.

How does Loopback work?

Why partner with FE fundinfo?

Global leaders in investment fund data and technology

We are here to help you keep your funds fully compliant, even after registration. We work with you to find the best solution that works alongside your existing business processes.

Our solutions can help you speed up your global fund registration processes and help you effectively produce and distribute your fund data and documents accurately.