Much has been made since the introduction of the European Benchmark Regulation (BMR) of the need among large financial firms to implement revised governance standards to keep track of benchmark usage. Both buy-side and sell-side, as well as custodians of index and mutual funds, were impacted by this change, which went into effect in January of this year for new product issuance, as a way for European regulators to ensure the “accuracy and integrity of benchmarks.”
Nevertheless, as firms investigate new standards and systems for managing their index licenses, they are increasingly aware of the benefits of optimized index license management (ILM) tools such as MDSL’s Index License Manager. These benefits range from deeper insight to significant cost savings, driven by Index License Manager’s comprehensive and centralized documentation capabilities.
Keep scrolling for a breakdown of MDSL’s proven system and a view into how financial firms are using ILM platforms to lower their costs.
The Anatomy of a Game Changer
MDSL’s Index License Manager is an online tool for financial firms to help their teams manage the increasing scale and scope of licensing types. Pressure from index sponsors has increased the number of audits firms should expect to see in the coming years. Financial institutions need to accurately identify and track benchmark usage at any location in one’s business and stay within regulatory compliance.
Index License Manager enables market data teams to document and manage all index licenses, streamlining compliance with regulations and audits, and instantly verifying terms and coverages of each license.
Here are the primary features of the Index License Manager:
- Inventory ToolIndex License Manager tracks benchmark allocation to each product using the benchmark. This includes funds and structured products.
- CatalogKeep track of use and key attributes for each benchmark.
- Export Benchmark information and the status of each administrator can be exported to external systems
- Task ManagementAutomated software generates tasks and tracks progress for index related events.
- ReportingCreate useful reports detailing e.g. fees based on assets under management (AUM) and notional values of index linked products. .
Tools such as MDSL’s Index License Manager are streamlining compliance procedures and changing the game for financial firms who are trying to stay ahead of regulators.
Keeping Up with the Pace of Regulatory Change
One of the primary benefits of a tool such as MDSL’s Index License Manager is that it facilitates a firm’s ability to meet regulatory obligations. By providing finance teams with a single location of access to all license agreements, indexes, and families, Index License Manager allows you to both track benchmark activity and store catalogues from third-party index aggregators. These catalogues enable you to create detailed mapping of indices according to the benchmark consumption of each individual index. These maps can apply to either funds, structured products, or data licenses for users.
Combined with the different classifications laid out by BMR and required by the ESMA, each map allows teams to see where authorized benchmarks are in use and by which products, identify substitutes, confirm the administrator and competent authority, status and EU endorsing administrator. Each of these features allows administrators to check that benchmark usage stays within regulatory requirements.
A sandboxing function allows users of the Index License Manager to compare the impact of substituting one benchmark for another and measure it through a variety of scenarios. ILM can also serve as a repository for documentation supporting index management such as the individual benchmark statements and compliance statements.
Managing Indices Can Lower Your Costs
Using a tool such as MDSL’s Index License Manager can save firms time and money by streamlining benchmark usage and consolidating market data, contracts, and every detail of each vendor relationship into a single tool.
Index users, procurement managers, C-suite members, and index administrators can easily access the information they need to carry out their agendas.
If your financial firm is looking to reduce the burden on your staff of maintaining its index licenses, now is the time to get in touch with MDSL’s team of experts to learn how our Index License Manager can reduce complexity, ensure compliance, and lower your overall costs. Contact us today to learn more!