Tailored Shareholder Reports will provide more transparency for investors—great! But the process to provide that transparency? Perhaps not so great, if you are not prepared.
For fund administrators, Tailored Shareholder Reports may mean a complete overhaul in the way you run operations. An initial challenge to adopting this rule is understanding the many components of the Tailored Shareholder Report process— data management, document production, reviewing, processing, filing, tagging, printing, and posting of the additional documents. And on top of that, how do all of these individual pieces fit into one cohesive process?
If you aren’t sure where to begin, you are not alone. That’s why we’ve developed this three-step guide to help make sure you are on the right track to comply with these new requirements.
As a first step: Review existing process. This will help you lay the foundation for determining what needs to change to comply with the Tailored Shareholder Reports rule. Examine specific aspects of your process:
Reorganizing your process may seem daunting at first. But remember that it’s likely simpler than it may seem. All of the data in the Tailored Shareholder Reports currently exists somewhere in the fund’s shareholder reports, it just needs to be rerouted to more refined documents, and then broken out by class.
To reorganize your process, consider taking these steps, building on your existing process outlined in Step 1:
Reorganizing your process—and testing out that new process—will be absolutely critical to help identify any hiccups and troubleshoot them before you are required to file.
There are many factors to consider in determining resources and cost. We encourage asset managers to look at each phase of the process and determine where the expertise lies. For example, asset managers may want to consider:
Notably: Where does expertise lie? Are you asking a fund accountant to manage the import of data, for instance? Or a lawyer to handle typesetting? If so, you may want to explore automation. Automation can help optimize efficiency, reduce costs, and improve the accuracy of documents.
Whether it’s a process, regulatory, or implementation question, we’re here to help.
We specialize in creating technology that increase efficiency and reduce error (check out TSRTrax, which utilizes automation to tackle every step of the TSR process).
Contact us today to learn more.Contact Us
As most funds are in the throes of preparing for compliance with the new Tailored Shareholder Report (TSR) rules, the Securities and Exchange Commission (SEC) released a set of Frequently Asked Questions (FAQs) to help provide clarity on some questions the commission has received over the past several months.
On January 2, 2024, the Securities and Exchange Commission (“SEC”) published to the Federal Register a new rule and new Form SHO (the “Rule”) pursuant to the Securities Exchange Act of 1934 (“Exchange Act”) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (“DFA”). This Rule 13f-2 will require the publication of short sale related data to investors and other market participants.