Last Wednesday, we listened in on a Webinar hosted by Confluence, a company fund administrators use to automate reporting, entitled, "Managing the Countdown to Money Market Reform Reporting: Chaos or Control?" The talk featured Chuck Daly, Vice President, Assistant General Counsel of Fund Administration at JP Morgan, Sara Reece, Assistant Financial Controller at The Principal Financial Group, and Scott Powell, Senior Market Analyst, Confluence. The three discussed the pending SEC portfolio reporting requirements, including the October 7 deadline for website reporting and the December 7 deadline for the new XML Form N-MFP. We excerpt some of the webinar comments below.
On the webinar, Daly explained, "While it seems like it's a long way out, there is not really much time to get ready. It requires a detailed and a well orchestrated preparation and approach to be ready for the October 7 and December 7 deadlines. Website reporting is going to be a five day business day turn, starting you're your September 30 data filed by October 7. The N-MFP starts with the November 30 data filed by December 7 and will overlap with the web posting data, so at that point you'll be filing both. The first N-MFP link with your website data will be with your February 7 data that November 30 piece that goes in with the N-MFP. But the focus really needs to be on the process and all of the data that is going to be required for both reports and down to the administrator details of posting and filing."
He continued, "How we would get there, really is driven much by the NRSRO designation and how you are going to back into the data that is required.... The last of the 2010 deadlines is December 31, the last day to file that SAI. You can certainly do it before that, and from an operational standpoint it'd probably be desirable because it is arguably the most critical deadline. It's going to drive the data that goes to the N-MFP and much of the portfolio holdings disclosures. The SEC addressed some of the timing of the designation in their May question and answer piece. You can continue to operate under the pre-amendment structure until you make your designation and make it effective with the filing of your SEC disclosure document, your SAI.... So I can't stress enough that the NRSRO designation is going to be one of the drivers of being ready for the data sources for those two deliverables."
J.P. Morgan's Andrew Freed commented, "The first step is making sure you got a good reading and a good review of the SEC release, which came out at the end of February or the beginning of March. So this release gave great detail of all the data elements that are going to be required for each of the two web filings.... For me the first step was defining a source for each of the data elements. Unlike your N-Q ... we're going to have more sources for where that data is coming from.... Now we've got to do all this in 5 business days."
Reece added, "People and the process are going to be what is important. We have a team of three people involved in implementing the holdings portion of this rule. To get up to speed, that team has read the rule including the adopting release, participated in webinars such as this one, and even talked to some other fund companies about certain technical points of the rule.... Right now we are trying to define what our process for producing the website holdings and form N-MFP will look like. That includes mapping out data sources, specifically when we'll be able to get that data.... We are also looking at a technology solution. We looked at the applications that were available to us and decided to move ahead with [Confluence's] Unity regulatory reporting functionality."
She adds, "It is the first time that we have to file anything using the XML requirements, so we are just going to need to get our arms around that new technology. It requires a significant amount of data that has not traditionally been house in the fund accounting system, which has been the fund administration primary source for data. A lot of information is contained on off line spread sheet and that we will likely have to get information from the portfolio management system.... That five day turnaround is a very short window of time to pull the information together.... My team has been completing the EDGAR filings for a number of years for forms and N-Q and N-SAR. We anticipate that we will follow the same internal controls."
Finally, Powell commented, "In speaking with people across the industry, both clients and other stakeholders, there is three areas where people are challenged with Form N-MFP. Those are the data, the technology, and the new data file format. Form a data stand point, the format N-MFP introduces the need to capture NRSRO information, also introduces the need for collateral for any repurchase agreements that are out there, and also some detailed information on your enhancements.... This is information that isn't currently reported in your N-Q or your N-CSR, and people are really struggling to where to get this data and how to get it normalized and ready for report in time for the compliance date.... From a technology standpoint, people are dealing with new XML file format and the SEC has not released the schema for that file format yet. In their guidance that they provided last week, they did say that they are expecting to release that information mid late summer."
