Canadian Investment Firms Automate Fund Processing

Terry Flanagan

Investment management firms in Canada are focusing on creating efficiency in their fund accounting operations as regulations on transparency kick in.

Milestone Group, a provider of optimized fund processing technology, has announced that BMO Financial Group has selected its pControl platform to automate the management and control of its net asset value (NAV) production and validation processes as well as distribution processing.

“Both NAV control and distribution processing are functions that have traditionally been manually intensive and dependent on multiple systems,” said Geoff Hodge, chief executive of Milestone Group, which is based in Australia. “With pControl, we can automate daily tasks, checks and controls that clients would otherwise perform manually or in a semi-automated way.”

Milestone Group’s deal with BMO, one of Canada’s ‘big five’ banks, marks its first foray into Canada, where regulators are in the midst of a multi-year project to modernize the regulations of publicly-offered investment funds.

For example, under new point-of-sale disclosure requirements, mutual fund companies are required to produce a “fund facts” document for each class or series for each of their mutual funds.

In addition, on April 30 an amendment to National Instrument 81-106 took effect, requiring an investment fund to make the NAV of the fund as a whole as well as the NAV of each individual security in the fund available to the public at no cost.

For asset management firms, the regulations present formidable data management challenges, including the need to produce many more documents than they do today.

“Milestone Group’s pControl platform provides us with the architecture to innovate and in effect reinvent how fund administration is performed in Canada,” said Steven Hokansson, vice-president of investment funds at BMO Financial Group, in a statement. “pControl’s focus on automation of NAV production and related fund accounting operations promises to deliver significant cost efficiency, risk mitigation and operational transparency.”

As the regulatory landscape continues to change, funds must be prepared to respond to these challenges in order to manage today’s operational risk and tomorrow’s regulatory demands.

Using automated technology allows these documents to be created in a fraction of the time needed using traditional desktop publishing methods.

Sun Life Global Investments (Canada), an asset manager, has started an initiative to use technology provider Broadridge Canada’s Smart Document Creation solution for the automated creation of regulatory point-of-sale fund facts documents.

The Canadian Securities Administrators (CSA), an association of provincial and territorial securities regulators in Canada, intends to publish requirements for point-of-sale delivery of the fund facts for mutual funds; the CSA will also consider point-of-sale disclosure for other types of publicly-offered investment funds.

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