Quarterly Statements Rule: 3 ways to ensure compliance

In August 2023, the SEC announced new regulations for private markets, part of a trend of greater transparency requirements for private equity firms. With the compliance transition window well underway, if you haven’t already taken a closer look at your firm’s operations process, the time to start is now.

Among other new regulations, the new Quarterly Statements Rule accelerates reporting requirements for firms, requiring advisers to distribute quarterly statements to investors that disclose fund-related information such as performance, investment costs, and fees and expenses, within 45 days of the end of each quarter and 90 days after the end of each fiscal year (with an additional 30 days, respectively, for funds of funds). Additionally, private fund advisers are required to obtain annual audits of all the private funds they directly or indirectly advise.

In order to meet these new requirements and timelines, you’ll need to be able to capture the required data from your files and systems accurately and efficiently. This shift will be an operational challenge for many firms, requiring them to transform their record-to-report workflows.

With the T+1 settlement transition affecting the buy-side in 2024 as well, firms need to seriously consider opportunities for increasing operational efficiency and automating previously manual processes across their front, middle and back offices. Keeping your operations process as is, particularly if it involves manual data processing, has become an unsustainable option.

Introducing technology that can automate your workflows will allow you to expand your back office capabilities and meet reporting requirements without devoting hundreds of hours of your team’s time to manual data extraction. Not only will you be able to report on your data quickly and accurately, even from unstructured documents, you’ll be able to trace any extracted data back to its source.

Three ways to improve your operational efficiency and stay compliant:

1. AI automated workflows: With an automated workflow powered by AI as part of your firm’s tech stack, you can capture the data you need in real-time and ensure your firm is compliant and ready for further transparency regulations in the future.
   
   Using an investment document processing platform with AI-powered workflow automations will ensure your extracted data is accurate, validated and transformed into the required format so your firm is prepared for these changes.


2. Consolidated use cases in one platform: Automating multiple workflows across departments within a single platform will increase your efficiency, reduce duplicate work and training for your team, and ensure no data points fall through the cracks.
   
   By implementing one platform with both extractive and generative AI, you can automate multiple document workflows using one system, from capital calls, capital account statements, and SOIs to more complex documents like financial statements and loan agent notices.


3. An integrated tech stack: To keep your data moving and prevent bottlenecks, it’s essential that your tech stack is integrated and your applications can speak to each other.
   
   Choose a platform where you can create an integrated end-to-end workflow, with direct connections to your data sources and destinations through APIs and systems integrations, so your fund data will flow directly into your downstream systems.

Without an operations overhaul and automated workflows that can scale with your business, meeting these new regulations will be an insurmountable obstacle for many firms.

Alkymi helps firms capture verified data from even the most complex documents, with custom machine learning models trained exactly to their specifications. Traceability and auditability is guaranteed. Schedule a demo of our platform to learn how Alkymi can prepare you for the new private fund regulations and optimize your operations across your business.