The Securities Compliance Podcast Season 4 Episode 13 – The Impact of Data on Compliance, Part I

Podcast

Securities Compliance Podcast: Compliance in Context

In Season 4 Episode 13 of The Securities Compliance Podcast: Compliance in Context, host and Calfee Partner Patrick D. Hayes welcomes David Scalzetti, Senior Director of Regulatory Products and Strategy at ICE, as part one of a two-part program looking at the impact of data on compliance.

In the first part of the interview, David looks at how data can support a firm’s compliance program in any number of areas, including portfolio management, liquidity, valuation, and fund reporting.

The Headlines section looks at Commissioner Uyeda’s second term and a recent challenge from SIFMA regarding the Department of Labor’s new “Retirement Security Rule” proposal.

Finally, the show wraps up with another installment of What’s On My Mind, where host Patrick Hayes looks at an interesting characteristic of the American bison and related lessons gleaned about the upcoming busy season for compliance officers.

Show

Headlines

• Mark T. Uyeda was recently sworn in for his second term as SEC Commissioner

• SIFMA comment letter requesting that the DOL withdraw the “Retirement Security Rule” proposal

Interview with David Scalzetti

• How has the topic of valuation continued to evolve in the compliance space and how can data be used with valuation to enhance a firm’s compliance program?

• What are the compliance obligations associated with SEC Rule 2a-5 of the Investment Company Act?

• How can data support compliance with good faith determinations of fair value in compliance with 2a-5?

• How can data support compliance with valuation methodologies across investment strategies?

• Best practices when thinking about and establishing a valuation process.

• The impact of data on liquidity and portfolio management.

• Establishing a liquidity risk management program in compliance with SEC Rule 22e-4 under the Investment Company Act.

• How can firms use data on liquidity to manage in volatile markets?

• How can portfolio management and liquidity data be used to substantiate compliance with the SEC Marketing Rule?

What’s On My Mind

• Understanding the American bison and how it faces adversity

Quotes

20:17 – “So back-testing is a huge piece…Being as large of a provider as we are and [with the] number of clients we have, we get a lot of challenges on our price. And more often than not, the challenges are a function of being concerned about a particular valuation, but just getting some trigger events that may be completely market norm like the price moved by more than one or two percent regardless of whether that’s appropriate for what happened in the market or not. But understanding challenges and having transparency into that. And then finally, just broader transparency into market data and unchanged prices and things like that. So, again the four categories [to me] around valuation focus on methodology, back-testing, challenge, and statistics and underlying transparency and metadata.” – David Scalzetti 

35:20 – “We’ve taken a position that a lot of that input data that we have that goes into our valuation methodologies is also valuable to help solve for liquidity in a systematic and measured approach. So the way we think about liquidity, and we use a fairly standard definition, it’s just the ability to exit a position without having a significant impact on the price.” – David Scalzetti 

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About the Securities Compliance Podcast: Compliance in Context

Introducing the Securities Compliance Podcast: Compliance in Context presented by Calfee, Halter & Griswold, and the National Society of Compliance Professionals and hosted by Patrick D. Hayes, Partner and Chair of Calfee's Investment Management practice.

Designed as a personal master class for the securities legal and compliance professional, this podcast embodies Patrick’s passion to help you put Compliance In Context™ by combining the technical expertise of industry thought leaders and innovators with the practical experience of doers and key decision makers.

Listeners will find the podcast on Apple Podcast, Google Podcast, Spotify, and Stitcher.

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The opinions expressed by guest speakers and panelists during Securities Compliance Podcasts may not necessarily reflect the viewpoints of the attorneys and professionals of Calfee, Halter & Griswold LLP or its subsidiaries or affiliates. Calfee’s educational content is intended to inform and educate readers about legal developments and is not intended as legal advice for any specific individual or specific situation. Please consult with your attorney regarding any legal questions you may have. With regard to all content including case studies or descriptions, past outcomes do not predict future results.