Slow due diligence on distributors…

It started with due diligence on distributors. In September 2015, our founder Linda left a six hour on-site due diligence meeting. She was representing a global fund platform (distributor) and started thinking: “Why do we give more or less the same information to one company at a time? Imagine if we had a central database where companies can share the same information with unlimited number of companies…” The day after this meeting, we started to develop a LinkedIn for due diligence. A RegTech SaaS for B2B with initial focus on the market for global distribution of funds.

Linda Hellström, Founder

Susanna von Langsdorff, Partner

On-boarding of distributors…

The current partners of GRC WATCH met at East Capital in 2006. Linda and Susanna wrote more than 200 distribution agreements together. It could take up to 12 months to on-board a new distributor and they started wondering: “How can we speed up the on-boarding of distributors?”

Linda Hellström
Founder

The use of unique templates.

In 2013, Linda was filling out hundreds of questionnaires. All fund managers used their own template. 85% of the questions were more or less the same. This lead to a lot of copy pasting between questionnaires and also a lot of internal emails.

Standardization takes time.

In 2014, Linda participated in a working group to agree on mutual questions in the questionnaire (“DDQ”). She realized that it would take time to agree on the questions in the DDQ. She also understood that someone has to be in charge of the constant updates of the DDQ.

36 hours for 1 meeting!

The turning point. It was the fall of 2015. Almost 2 years before MiFID II entered into force. The number of on-site visits started to increase. Between 4 – 6 persons spent 4 – 6 hours per meeting (excluding time for travelling). Almost 36 hours in total… “What if we could exchange better data and reduce the need of onsite meetings?” Linda gathered a group of brilliant developers. She spread out hundreds of questionnaires on the floor. Took the most common questions and improved them based on her own compliance expertise. We then started to develop a tool to support the use of a mutual DDQ. We knew enough about the mutual questions to get started. Once the market agree on the rest, we would adapt to it.

Susanna von Langsdorff
Partner

Stress about on-going due diligence.

In 2016 everyone started to stress about the challenges to comply with MiFID II. Especially the tougher requirements related to on-going due diligence. The fund manager is utterly responsible for selling the funds to the right types of clients. MiFID II required better proof of that. Fund managers and distributors were also subject to tougher requirements in order to prevent money laundering and financing of terrorism. The manual process for collection of DDQs was already a headache. More frequent due diligence was going to make it worse. Meanwhile, we continued to develop our tool so we could launch it right before MiFID II entered into force.

Companies of all sizes
Connect and request reading rights

Companies of all sizes
Connect and request reading rights…

Due diligence on fund managers as well.

In 2016, distributors started to show interest in a more intensified due diligence on fund managers. We decided to launch “profiles” for distributors and fund managers at the same time. This meant that they could perform due diligence on each other in the same network. Avanza Bank was one of the first distributors to use GRC WATCH. They invited asset managers from many countries to our network. We also signed up with a number of fund managers who started to invite distributors to the network. An amazing feeling to see that they were performing due diligence in both directions. “Network due diligence” started to transform the due diligence process…

Due diligence on investors (“Know Your Client”)

In 2018, distributors wanted to start sharing their profile with transfer agents and fund administrators. They perform KYC on distributors as nominee investors and the documents they needed were already in the distributor profiles. This meant that the same profile could be shared as a response to more than one type of due diligence. We launched a profile for institutional clients as well so they could share the same types of documents with transfer agents and fund administrators.

A global hub for data exchange.

In 2019 we launched a report for “target market feedback” and complaints. In the beginning of 2020 fund managers started to request this report in relation to ongoing due diligence. Distributors also started to send it to all of their product suppliers (fund managers). Our goal is to act as a neutral hub for any type of data and report. We are interested in partnerships with other suppliers if we can offer a better service together. We have members in 27 countries now and our network is constantly growing.

Partner with us?

Are you a supplier of fund data, screening services or any type of report?