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Disruptive Regulatory Technology for Asset Management Industry. FinTech company changes the global Asset Industry forever

Periodic Reporting for period 1 - Fundsphere Terms (Disruptive Regulatory Technology for Asset Management Industry. FinTech company changes the global Asset Industry forever)

Reporting period: 2016-10-01 to 2017-09-30

The financial crisis brought to light shortcomings in the financial industry’s transparency, leading to a push to improve standardization and traceability in the Asset Management Industry. Implementing common standards and definitions across the EU is necessary to simplify the way information is managed for legal agreements, commission calculation and tracking. The bulk of the regulatory actions taken in order to avoid conflict of interests between asset managers (product providers) and fund distributors (sellers) is embedded in regulations MiFID II and RDR, supported by the Dematerialised Mutual Fund Sales Agreements (DMFSA, now called Open Terms) initiative proposed by market players (including Metrosoft) for more transparency and better consumer protection.

One of the processes that urgently needs improving is the creation, modification, search and compare of terms of business for sales agreements (contracts between buyers and sellers) which are notoriously resource-consuming (typically 200+ pages long, 3-6 months of lawyer work) but essential to the fund processing and distribution chain. Processing large volumes of assets has become a challenge due to the extensive documentation that lawyers must create, negotiate and review for every agreement. Lawyers are paid to work every line of documents with hundreds of pages, leading a standard agreement to take up to 3 months to produce, a non-standard one up to 6 months and some global ones even a year or more. For big asset management houses with hundreds of distributors this creates a major headache in time and resources spent creating and updating hundreds of agreements.

Fundsphere Terms solution solves the current risky and opaque business process and provides savings by offering an innovative searchable, data-driven solution to create digital terms of business and auto-flow information for downstream Straight-Through Processing (STP). Fundsphere Terms disrupts current Contract Lifecycle Process using Extensible Markup Language (XML) to create a completely native digital process from scratch with structured dialogue for complete, correct data capture, automated output and direct data storage.

The overall objectives of the project focus in the first place on piloting the industrial demonstration of the product with a first adopter – a large Asset Manager. This means updating the functional features of the product to create a fully operational platform verified by a real customer.
The other important objective is to replicate the solution for the market by scaling-up the system and offering it as software-as-a-service (SaaS) from the Cloud for small clients and from a Luxembourg-based hosting facility for Luxembourg-based clients.
The ultimate goal of the project is to commercialize the solution to increase Metrosoft’s revenues. The steps towards this goal require to attract prospects by communicating about the project and the proposed solution.
In the first reporting period, the project was progressed in all 6 Work Packages as per the initial plan.
The first two Work Packages focused on extending business and technical functionalities of the product. The most significant achievement in this area was review and extensions of the standardized syntax (format) for storing terms of business of the sales agreements, so called OpenTerms. We managed to publish it and design necessary extensions for the application. Apart from that, we completed other functionalities required by the market such as search and print tools for the product, security features and started work on versioning terms and implementing the workflow functionality. We completed the adjustments of the application to finally install it and expose to the external world in the Amazon Cloud.
In parallel, we were working on Work Package 3, where we successfully designed, procured and installed the hardware, third-party software and Fundsphere Terms product itself in the hosting facility in Luxembourg. We selected Labgroup, a certified PFS provider (Professional of the Financial Sector) to service the clients based in Luxembourg who don’t want to install the solution in their premises.
A lot was achieved in the Work Packages 4 and 5 dedicated for communicating about the project and for commercializing the solution. We attended 9 recognized industry conferences and events, disseminating the information about the solution and seeking for prospects. We prepared and conducted a number of remote and on-site demos of the product for potential clients. We selected, contacted and met a number of industry influencers to present them the benefits of the solution.
We also opened an office in London and hired a Business Development Leader to represent Metrosoft on the British market.
Cooperating with our coach, we updated the business innovation plan and are acting accordingly.
Fundsphere Terms offers unique value for all departments of Asset Managing companies: Legal, Sales, Operations, Compliance, Risk, as well as Distribution Platforms. When implemented in these companies Fundsphere Terms will provide benefits to all parties in Asset Management industry: distributors, intermediary networks (financial advisors), banks, fund supermarkets, transfer or centralizing agents and custodians as well as institutional and individual investors. The product will assure Investor protection, ability to distribute products much quicker, will allow meeting expected professional standards and compliance with transparency requirements. It will lower operational risk and will provide savings in operational costs by eliminating typical calculation and payment errors leading to deteriorating trust and monetary losses.
Screen shot from the Funsphere terms application
Event promoting Fundsphere Terms project
Stand promoting Funsphere Terms project