Questionnaires are a primary tool by which financial institutions obtain information on the policies and controls at a vendor or service provider, but the information exchange between vendors and financial institutions can resemble a tug of war. Generally, the vendor is completing not just one but perhaps dozens of questionnaires from current and prospective clients, putting in many hours to complete the required task and consulting with numerous in-house subject-matter experts to fill in the responses. The time commitment lengthens with the inevitable follow-up from vendor risk managers or their subject-matter experts to probe deficient responses or to validate replies.
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Financial institutions' oversight of third-party service providers/vendors is a tough job, not just for the institution's vendor risk staff but for the vendor as well. In most instances, the financial institution’s goal is to onboard the vendor quickly—vendor risk management (VRM) can slow this process. Aite Group offers a few tips to help vendors navigate this process more easily:
In what has become a continued theme in the U.S. brokerage industry, another firm announced it was shuttering its correspondent clearing division. J.P. Morgan, which inherited the legacy correspondent clearing business as part of the acquisition of Bear Stearns, has announced plans to exit the business. J.P. Morgan has partnered with Fidelity Investments' National Financial correspondent unit to transition existing clients over the next 12 to 18 months.
The term "shared economy," which is bandied about on talk shows, in popular media, and even in an upcoming Aite Group Impact Note, refers to the segment of the economy that connects consumers to share assets for a transactional fee in lieu of selling assets or transferring ownership. The growth of companies that connect consumers to one another using slick digital platforms has disrupted industries including hospitality, transportation, and insurance. If we take the long view and set aside concerns about temporary or short-term disruptions, we can see that consumer usage of these services indicates a readiness to take advantage of technology in order to efficiently use existing assets within a community.
In early November, U.S. regulators sent a message to the investment management community that they are ready to embrace innovation: Eaton Vance won SEC approval to launch a new kind of investment product, a nontransparent type of exchange-traded fund (ETF), called an exchange-traded managed fund (ETMF), which will function more like a traditional mutual fund than an ETF. But the SEC has its guard up; approval for ETMFs came only days after it rejected a different type of nontransparent ETF, one characterized by its use of a "blind trust" and unique redemption process.