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Money Laundering Scandal Emphasizes Need for Better Procedure Management

| October 19, 2017 | Dave White

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News breaking about the money laundering scandal in South Africa serves as a harsh reminder that even the most sophisticated organizations are susceptible to corruption. As the BBC reports, information has come to light that major global banks “may inadvertently have been conduits for laundered money.” The reports allege that £400M was illegally transferred through the banks by South Africa’s President Jacob Zuma and an affluent Indian-born family.

How is this type of exploitation even possible? While it’s very likely the banks employ Anti-Money Laundering (AML) Software, which is developed to help prevent and/or report money laundering, it may not have been enough to raise flags about suspicious activity.

AML Software can help companies meet compliance and regulatory requirements mandated by global policing organizations, but it’s not enough to manage the thousands of policies and procedures banks must rely on to manage and react to daily activity.

If true that the banks in the scandal in South Africa were “inadvertently” a conduit, the implication is one or more of the following:

The only path that does not put banks at risk in this situation requires:

  1. Well-documented procedures that are up-to-date and provided in a timely manner
  2. Procedures that are easy to find and apply to the correct business transactions
  3. Consumption of procedures tracked through usage analytics and reporting, as well as frequent content and usage audits

If any of these three critical operating procedures processes cannot be proven by the bank, then the bank will likely be at risk even if there was intentional, individual employee negligence.

Global banking has some of the most complex and dynamic procedures of any business context and this story is yet another proof point that it’s not just about pushing files around a content management system. The content within policy and procedure files, how and when the procedures are used, and how easily the procedures can be associated with the appropriate business transaction is critical to the successful operations of regulated businesses.

But, it doesn’t require an enormous amount of complexity to ensure policies and procedures are effective. It’s time for global banks to adopt smarter and more automated content processes and move beyond simple word processing documents and PDFs. From content analytics, through contextual application of content, to AI and Machine Learning applications in content processing, Content Automation with Smart Content for procedure management is a requirement for modern businesses to be successful and mitigate costly risks.

Quark Software + WIRIS = Mathematical Automation

| September 15, 2017 | Autumn Cueller

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If your technical or financial content is illustrated with mathematical formulae, you’ll be interested to know that Quark Publishing Platform and Quark Author can automate mathematical content in addition to your text, tables, charts, graphics, and video.

Quark Author includes the WIRIS EDITOR, a GUI mathematical editor created by Quark partner Maths for More. When your content is published, equations are then converted to the best possible format for your target destination, be it HTML, ebook, PDF, or other. The goal is for the formulae in your business critical content to match the surrounding text for a seamless reading experience, and Quark Software with WIRIS EDITOR makes that goal an afterthought.

Check out this minute-long demo showing how Quark Author integrates with the WIRIS equation editor:

To learn more about Quark and our focus on content automation, contact us or download the free eBook The Beginner’s Guide to Content Automation.

About the Author
Autumn Cuellar is a Technical Services Consultant for the Quark content automation team. Her first degree is in Biomedical Engineering, which led to a role as a researcher at the University of Auckland in New Zealand. There Autumn co-authored a metadata specification, explored the use of ontologies for advancing biological research, and developed CellML, an XML language for describing biological models. Since leaving the academic world, Autumn has been delighted to share her enthusiasm for XML in technical and enterprise applications. At Quark, Autumn provides her XML expertise to organizations seeking to hide the XML for a better non-technical user experience.

The Top Three Content Challenges for Asset Management Firms

| June 14, 2017 | Nick Howard

Earlier this year Quark partnered with TSAM (The Summit for Asset Management) to find out how asset management companies approach content creation, management, and delivery. We surveyed 111 professionals in a variety of asset management roles and found that the majority of respondents struggle to create and maintain data-heavy content types, such as financial research reports, pitchbooks, commentaries, product profiles, fund marketing assets, and more.

As we analyzed the data, it’s clear that three main content challenges plague asset management teams.

#1 Keeping Up with Digital Transformation
Digital transformation is driving change in nearly every aspect of today’s enterprise and, in most cases, requires fundamental improvements to traditional content strategies. In our survey, asset management professionals reported a wide range of digital transformation initiatives with the top three being: reducing reliance on paper, moving content online, and improving intranet/portal content consumption experiences for employees.

#2 Maintaining Consistency across Channels
There is no doubt customers want (and need) more digital content. In fact, 83% of survey respondents said their customers want more Web content, more mobile content, or both. However, almost 75% of respondents admitted to being dissatisfied with their digital content capabilities and more than 50% reported having no confidence in the consistency of their content across print, Web, and mobile channels. Fulfilling the customer requirement for more Web and mobile content is only worthwhile if the content is accurate.

#3 Relying on Outdated Tools and Technology
The content challenges associated with digital transformation and omni-channel publishing are only compounded by the fact that the majority of asset management companies still rely on shared or local file systems to manage their business-critical content. Sixty two percent of respondents stated that they find it hard to manage the document variations needed to support country and business unit requirements. It’s tough to stay competitive without modern systems that streamline content creation and management.

Addressing Challenges with Content Automation
Although these are complex pain points, new content automation solutions are already helping asset management companies solve their content challenges. By moving away from document-centric workflows and adopting structured content, it’s possible to address every challenge listed above to speed time-to-market and increase customer satisfaction.

We hope you’ll join us at TSAM New York on June 21 to attend our session “Transforming Fund Marketing with Content Automation.” You will learn more about how your organization can get ahead of competitors and drastically decrease the time and costs associated with creating, formatting, reviewing, and distributing business-critical content.

Nick Howard has over two decades of experience in enterprise software, working around the globe from the United Kingdom and Europe to New Zealand, Australia and the United States. As senior director of sales enablement for Quark, Nick is focused on solving customers’ specific content challenges. He has met with hundreds of customers across corporate, marketing, and enterprise publishing functions and is adept at turning challenges into real world software requirements.

Research Reveals Content Challenges Faced by Asset Management Firms

| March 15, 2017 | Gavin Drake

Today at TSAM London Quark revealed the findings of a survey we conducted among asset management professionals to learn more about their approach to content creation, management, and delivery. The research was conducted among the TSAM community, which stands for The Summit for Asset Management. Global TSAM events attract financial services organizations interested in staying competitive.

Our research, based on 111 survey respondents, uncovers universal content challenges asset management companies face – from reliance on outdated technology solutions to increased demand for Web and mobile content. The findings highlight how content teams struggle to effectively produce and provide multi-channel information to internal and external audiences.

Study highlights:

Ultimately, our research confirms that the demands for content have changed dramatically in the past decade while tools used to create and manage content have changed very little. This makes it almost impossible for asset management firms to deliver timely and accurate multi-channel content, which is a competitive requirement in today’s business landscape.

To address and solve content challenges, we at Quark advocate content automation, an evolution of enterprise content management that minimizes risk, improves the customer experience, ensures compliance, and eases the burden most content teams face today.

Gavin Drake is Vice President of Marketing for Quark Enterprise Solutions where he drives the adoption of content platforms that leverage automation to improve every stage of the content lifecycle. By moving away from creating static, siloed documents to creating reusable content components, it’s possible to reduce costs, improve content quality, and operate more competitively.

Investment Research Reporting in the Digital Age

| January 18, 2017 | Autumn Cueller


Financial reporting often includes many repetitive tasks that can eat away at resources, and when copy/paste is involved, there’s a chance for error that could make or break your business. This is why financial firms are turning to Quark to help automate their content processes. In this digital age, speed to market is critical. Your customers depend on having the latest information at their fingertips.

Quark has partnered with EFA, whose market-leading EFA Platform provides financial models essential for investment research analysis. Together, Quark Publishing Platform and EFA Platform provide a powerful Investment Research Reporting Solution for managing the content lifecycle of investment research, reporting, and analysis.

The Quark Investment Research Reporting Solution includes a wizard that allows users to select several options, including the type of report being created, the subject of the report, and preferences such as whether financial data should be presented in units of millions or billions of dollars. Once these options have been selected, Quark Publishing Platform contacts the EFA Platform for the latest data and, using that data, creates the requested report with tables and graphs that are common to all reports of the specified type. The report’s author can then add additional tables and charts (again pulled from EFA Platform), write new content, preview how the report will look when published, and share the report with team members.

To view the Investment Research Reporting Solution in action, watch one of our videos showcasing Quark’s partnership with EFA: a short overview or 30-minute in-depth demo.

To benefit from Quark’s Content Automation tools in your financial document lifecycle, ask Quark’s expert a question or request a meeting with our team.

Autumn Cuellar is a Technical Services Consultant for the Quark content automation team. Her first degree is in Biomedical Engineering, which led to a role as a researcher at the University of Auckland in New Zealand. There Autumn co-authored a metadata specification, explored the use of ontologies for advancing biological research, and developed CellML, an XML language for describing biological models. Since leaving the academic world, Autumn has been delighted to share her enthusiasm for XML in technical and enterprise applications. At Quark, Autumn provides her XML expertise to organizations seeking to hide the XML for a better non-technical user experience.

Policy & Procedure Solution Requirements for Financial Services Firms

| October 19, 2016 | Quark Blog Team

policies-procedures-lifecycle

Today’s hostile regulatory environment has put financial services firms on the defensive. Faced with stiff penalties, the growing risk of prosecution and career-ending rulings, CXOs are flocking to improve their regulatory profile. Unfortunately, an outdated manual workflow means a lack of control over policies and procedures content and therefore increased risk within financial services firms.

policies-procedures-beforeworkflow

Look familiar? Legacy policies and procedures lifecycle creation and management solutions are:

That’s because financial services’ policy and procedure solutions leverage generic software, such as word processing and spreadsheet applications. These tools not only consign policy and procedure activities to manual processes, but they serve as a bottleneck to limit the contributions of robust content management solutions as well.

This begs the question: what would an effective policy and procedure lifecycle creation/management solution look like?

It would:

Leverage efficiency-boosting solutions to lower costs:

1. Business-rules-driven engines to drive efficient, parallel workflows that allow SMEs to work on content simultaneously
2. Standardize on best-practice workflows to promote consistency across the enterprise

Leverage automation technologies to replace manual tools/processes with high-productivity systems:

3. Leverage automated features to track, manage and update policy and procedure content. This feature alone can eliminate substantial labor hours currently devoted to the task.

Enable a wide variety of output formats/channels:

4. Support existing publishing and distribution channels for policies and procedures such as print and PDFs
5. Enable the automated production of modern publishing formats for policies and procedures such as HTML5 and mobile apps
6. Focus on making the procedures as easy to find, search and consume as possible

Replace point solutions with an enterprise-wide platform:

7. Through the use of configured templates, a common platform for all users dramatically increases the consistency of policy and procedure content and
activities across departments and regions
8. A single platform is cost effective for IT to manage

However, the platform must:

By meeting these criterion, financial services CXOs can dramatically bend the policy and procedure content lifecycle cost curve downward. This allows PMs to untether themselves from the straight-line costs usually associated with ballooning policies and procedures content.

Through an elegant and holistic design, Quark’s content automation platform goes far beyond fixing and patching your policy and procedure systems to build out a fully-functioning, enterprise-wide content platform. As a result, our policy and procedure content lifecycle solutions are helping financial services executives to:

policies-procedures-afterworkflow

With so much at stake for financial institutions, the Quark platform is comprehensive. You can seamlessly create, update, manage, publish, and deliver your policies and procedures via a wide range of channels and modes, including print and all the latest digital devices.

So, what are you waiting for? Meet the demand for accurate, up-to date and easily searchable policy and procedure content and stop fiddling with low-value tasks and focus fully on high-value content creation.

Brexit and MiFid II – What to Expect

| July 6, 2016 | Dave White

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The UK referendum vote to leave the European Union has brought plenty of questions and few answers regarding the plan, timing, and potential outcomes of the UK’s withdrawal.

One area of significant interest is the implementation and UK authority of new MiFid II (Markets in Financial Instruments Directive adopted April 15, 2014) as defined by the EU and implemented in the UK by the FCA (Financial Conduct Authority). On June 24, 2016 the FCA clearly stated, “… Firms must continue to abide by their obligations under UK law, including those derived from EU law and continue with implementation plans for legislation that is still to come into effect.”

Many of Quark’s customers use Quark Enterprise Solutions to create and publish IRR (Investment Research Reports) and changes to the long-standing investment research business model is required by a section of MiFid II. In April of 2016 a draft Delegated Directive defines the requirements related to Inducements (Chapter IV), the goal of which is to remove the potential for a conflict of interest between investment research, investment opinion, and the funding of investment research through commissions on trades. These are “level 2” implementing measures and while initially stated as effective in January of 2017, it is expected that the earliest these would go into effect is now closer to January of 2018.

If the UK officially applies for exiting the EU in the 2016 calendar year, and the EU requirement of exit completion within two years is held, then the UK would need to adopt these EU regulations as is, or somehow create their own version of them. Given that the inducement directives related to investment research are not one of the highest priorities, it is easy to imagine that the regulations could be adopted as-is or just as easily dropped entirely from UK regulation. However, the EU will almost certainly require that the UK adopt the full MiFid II regulations as they relate to any cross-border business engagements.

The most expensive path for our investment research customer’s business would be the implementation of different regulations related to investment research inside the UK versus outside the UK. So the highest probability outcome is that the UK will follow and fully adopt MiFid II if and when the EU finalizes the timeline(s) for implementation. If that’s the case then the urgency still exists for investment banks to modernize their investment research reporting technology platforms in order to remain competitive when the regulatory changes come into effect.

Dave White is Chief Technology Officer for Quark Software. An engineer by training with over two decades defining standards for content automation, White is on the forefront of technologies shaping the future of content. He works with customers and partners across industries to develop and implement transformative solutions for creating, managing, publishing and delivering business-critical content.

MAR: Standardizing Communications for Compliance with New Regulations

| May 19, 2016 | Andres Cuenca-Torres

MAR

The incoming Market Abuse Regulations (MAR) affect so many aspects of day-to-day trading and sales activities that it is little wonder most international banks have assigned large teams to assess how they must change to maintain compliance with the new regulations.

Teams have generally been organised to deal with specific sections of the regulation, from reporting of suspicious trading activity and patterns to the establishment of procedures for disclosure. However, at the end of the Final Report for Technical Standards (ESMA 2015), in section 10, are statements regarding standards expected for investment recommendations. From speaking to a number of large banks, internal compliance teams have paid relatively little attention to this particular section. One might ask why, when so many resources have been dedicated to MAR as a whole.

One reason could be that some banks already feel well prepared for MAR because they have large equity research operations. Section 10 could be interpreted as an extension of the strict standards equity research must already meet, to other wholesale financial products. These banks may feel they only need to extend their equity research framework to all other products where commentaries and trade ideas are communicated and that they have technology in place already.

Other banks seem to have decided that the standards are so difficult to meet that regulators will only want them to comply with the spirit of the regulation rather than the letter. This seems hopeful at best, given that the standards laid out in Section 10 are quite precise in defining what an investment recommendation must contain to be compliant.

Scope of MAR: Investment Recommendations
Our starting point is to examine the scope of the regulation. That’s simple enough because the regulation includes every instrument and asset class. Practically every traded instrument, whether exchange traded or over-the-counter, “cash” or derivative, FX, credit or interest rate-based, will be covered by the regulation.

Possibly even more important with regards to scope is what exactly is deemed to be an investment recommendation. This is harder to interpret though the general consensus seems to be that, again, a wide array of communications will be in scope. Market commentaries, trading ideas, and weekly strategy publications will all fall under the MAR umbrella. This is at the heart of the problem that must be solved and I will return to this shortly. Perhaps there is a “get-out” in terms of who writes these communications? Unfortunately not. Though the terminology around “qualified”, “non-qualified”, and “experts” can be confusing, in the end, market-related communications produced by any of these would be in scope.

Finally, the method of dissemination is taken into account, but this offers little respite. “Intended for distribution channel or to the public” might offer some hope that a sales person sending a trade idea to one or maybe a small number of hedge funds would not be construed as being available to the public.

Not so. If information is “available or likely to become available to the public”, then it is deemed in scope. Whereas equivalent US legislation sets a number of recipients above which the communication is deemed to be publicly available, the European Securities and Markets Authority (ESMA) simply believes that any email or any idea on a website can easily be reproduced and made available for public consumption. Whether you send ideas or commentaries through a chat system, email, or website, those communications will have to meet the standards set out by ESMA.

Why Section 10 of MAR is a Challenge for Banks
We suspect Section 10 will be applied to all instruments and asset classes, whether in a trade idea or market commentary, no matter who writes it or how it is distributed. For a bank with large wholesale operations, we are looking at hundreds, perhaps thousands, of communications being in scope. Per day! Think of all the sales people whose job it is to inform clients of market activity and suggest ideas to capitalise on anticipated market movements, and you will start to get an idea of the scale of the potential problem.

With compliance deadlines looming, it’s time to look at what Section 10 actually requires of banks. Does meeting MAR requirements simply mean re-training sales and trading staff to include very specific and required information in every single one of their communications to customers? Or does complying with MAR go beyond staff re-training?

Section 10 Requirements for Investment Recommendations
Investment requirements vary according to asset class but on the whole, the following information needs to be included:

Not all of these apply to all investment recommendations but many will. Consider hundreds of sales and trading staff sending or publishing recommendations to many customers, multiple times a day. It is highly unlikely that all such communications will meet the criteria, even with the best intentions. The effort to train sales and trading staff to select the appropriate disclaimers, find the right database for disclosures, and include a historic record of recommendations would require a significant change management project.

Potential Solutions: Automating Investment Recommendation Production with Smart Content
Outside of having impeccably trained staff, a potential solution would be to take the responsibility for meeting MAR requirements away from the sales and trading team altogether. This can be done through automation. An automated process that recognises the author, time, securities, and other such data involved in the recommendation has two huge advantages.

Firstly, it means that all the data required for a recommendation will be automatically – and correctly – populated into the recommendation at the time it is created. Secondly, it will mean that people putting out the recommendations will be able to concentrate on what they do best, that is, generating ideas or interpreting market conditions. Compare this with the alternative, which is to ask the sales and trading team to add this information manually, which no doubt leads to inaccuracies and risk.

So how do you automate this process? Some well-meaning IT professionals might suggest the option of using macros to meet this challenge. Macros are sets of instructions that can be called to automatically perform a specific task. This would present various challenges from the fragility of macros themselves to how you manage their rollout across a distributed workforce and maintain, update, track and audit all of the necessary conditional content – such as disclosures. When regulatory compliance is at stake, this would be a high-risk automation solution. The right approach is an emerging technology category called content automation.

Why Quark is Best Positioned to Solve the MAR Challenge
Quark’s content automation platform has been helping global financial services organisations meet exacting compliance requirements for many years in the areas of investment research, standard operating procedures and fund products to name a few. This includes managing thousands of information products and ensuring the necessary disclosures, auditing and distribution – all of which would go a long way towards making compliance with Section 10 easier for financial institutions. The burden of data regulations is something that Quark’s clients in equities research are already very familiar with. We have delivered solutions that author, manage, publish and deliver equity research content to some of the leading banks in the world.

The benefits, however, are not limited to compliance with the regulatory framework. As anyone who has sent or received regulated communication will attest, it very often lacks a professional or even appealing look and feel. Using a common content automation platform such as Quark’s would have the benefit of giving all these types of communication a standardised, branded and professional look, which further enhances reputation and customer satisfaction.

Finally, in an age where banks want to publish more and more dynamic web content, that is, HTML rather than a static PDFs, Quark enables investment recommendations to be published simultaneously to print, email and web without further work needed to optimise the content. In most cases today, this type of omni-channel publishing is done through manual processes that are time consuming and expensive. With a content automation platform, even omni-channel publishing can be automated to reach more clients with the right information at the right time. Banks might also consider using MAR as the jumping off point for automation of other business-critical content across the enterprise.

Summary
MAR places a very heavy burden on sales and trading staff to make a lot of decisions on what should be included in even the simplest and shortest investment recommendations. At best, staff will do this correctly but it will take them a very long time to add all the necessary data, impacting their productivity. At worst, they will get it wrong and the material will be deemed non-compliant, putting banks at a high risk for losses, both from claims made by clients and penalties issued by regulators.

The solution is to relieve sales teams and traders of the responsibility for making sure every single one of their investment recommendations complies with MAR. A content automation platform can do this by populating a recommendation with all required information at the point at which it is created. Based on input from the author, a content automation platform uses business rules to recognise and implement the correct data. This happens behind the scenes so the trader can publish and deliver recommendations with confidence, which is a far cry from the risky processes at work today. Ultimately, it’s time to recognise that yesterday’s approaches are no longer good enough for today’s highly-regulated environment.

Andres Cuenca-Torres is a Regional Business Manager for Quark based in London. He has 18 years working in the financial industry helping banks and investment firms. His specific expertise is in sales and trading, compliance, risk management and navigating regulations as they relate to content creation and delivery. He can be reached at acuencatorres@quark.com.

Could Now Be the Time for Research Product Innovation?

| April 5, 2016 | Quark Blog Team

Investment-Research-Software-Innovation

Regulatory change is driving new approaches in asset manager research procurement process and in turn, the technology of the research that serve them. A process begun in the UK has evolved into a global debate about research funding. The final act in this saga may be pan-European legislation (due in 1Q 2018) that vastly transforms the global research payment market with substantial implications for all investment bank research producers.

In November 2012, the UK regulator began a process to force asset managers to be more careful with the client commissions they spent on research. A study conducted by the UK FSA found that many managers were less careful in spending client commissions than they were with their own funds. The regulator’s logic was that increased discipline on the part of the asset managers would lower research costs for the end saver, thus increasing returns.

Institutional equity research is a very unusual market, in which asset managers spend their clients’ money to buy research. Most of it is produced by investment banks, has no specific price and is not governed by purchase contracts. Rather, banks make the research available to asset managers at no specific cost, and hope to be rewarded with an unspecified level of equity execution commission.

The November 2012 document, “Conflicts of Interest” mandated that asset managers construct monetary research budgets rather than employing more variable, theoretically infinite “broker vote” systems. This was an attempt to get asset managers to be much more specific about the research products they were buying rather than the historic practice of receiving large amounts of unsolicited research and paying variable amounts for it. At the same time, commission unbundling, or the relatively recent ability of asset managers to use commissions to buy non-investment banking research products, created a further element of competition for the investment bank research producers.

The UK regulator promised a further review and released new rules in May 2014. They mandated that asset managers must:

a) Place a value on research they bought with client commissions. (This was a challenge as most investment banks will not price the research specifically).

b) Not use commission to buy research they didn’t use. (This was a challenge because banks regularly flooded asset managers with thousands of unsolicited research documents, a fraction of which were actively used).

The net result of these measures will be lower asset manager research spending. Faced with finite research budgets, asset managers will have fewer, but deeper relationships with their key investment bank research partners. This will develop into a two-tier “Premium-Freemium” investment bank research market in which important asset manager clients – those that have chosen the bank as a key research supplier, will expect more sophisticated, interactive and customized research products than those asset managers that haven’t “purchased” the service. Bank research products that do not offer, customization, multi-channel distribution (including mobile) and inter-activity, will lose market share.

At the same time, banks will want to “advertise” to non-clients, increasing the importance of research “findability” as asset managers deploy more sophisticated search technology to manage their large research corpuses.

As a result of commission unbundling, bank research producers are competing against thousands of non-bank research producers that can now receive commissions in payment. Bank research producers will have to have better products to stand-out against this wider data set.

With the UK FCA now having created its final rules (for now) the next phase of the regulatory process in Europe shifts to MiFID II – the pan-European securities legislation that will apply across the EU in 1Q 2018. One of the very controversial aspects of the current draft is that it appears to potentially ban the use of commission entirely for the purchase of research. If that were to happen, investment bank research would immediately, and globally, be moved to a specifically priced market.

With the variable payment mechanism of equity commissions removed, banks would have to either price their research products, or provide it for free, which would not be sustainable.

This would revolutionize a decades-old model. Some investment banks are already responding to these dramatic changes by investing in new production systems to leverage multi-channel formats like HTML5 in order to attract, retain and maximize the profitability of their research clients. This is a level of research product innovation that exists in other markets – which investment research has largely avoided – until now.

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