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Thought Leaders in Cloud Computing: Interview with Skip Smith, COO of Confluence (Part 4)

Posted on Tuesday, Sep 10th 2013

Sramana Mitra: And your point is that with the cloud delivery model, the smaller fund managers are able to comply and keep up with these regulatory needs by using a service like yours to be able to do this at scale?

Skip Smith: Exactly. It levels the playing field. To your point earlier about other entrepreneurs and where investment opportunities are in this space: Our goal is to bring STP, or straight-through processing, to the investment management back office, much like it is in banking today. I think there is a tremendous opportunity for entrepreneurs to invest in this space. I am surprised at the extensive use of manual solutions, spreadsheets, and reviews that exist in the fund administration industry today. I think there is a ton of opportunity for investment in this area.

SM: What is happening on the receiving end of this equation? You are helping the funds report. All this massive amount of data and these reports are going into the SEC. What is the infrastructure on the SEC side to a) receive that information and b) to act on it?

SS: The SEC is facing their own challenges in updating their infrastructure and keeping pace with entrepreneurial companies like ours and others that bring solutions to market. If we talk specifically about the SEC, I don’t think anyone would consider a branch of the U.S. government as being early technology adopters. They are facing challenges as the solution providers in this space continue to innovate. If we could create a standard – a sort of consortium that could bring together a platform for these regulators – that is what it takes.

SM: It has to become automated somehow. If I ask you to put on the hat as the head of SEC and determine how you are going to constantly track all insider trading cases and be able to identify and prosecute them, how on earth are you going to be able to do that if you are not staying on top of the data that is coming in?

SS: It is going to have to be automated. There are going to have to be some standards formats. The same way we can do credit card transactions in banking or ACH [automated clearinghouse] wire transfers, we are going to need some standard formatting of data. This is a place where the SEC could lead a bit more and where the entrepreneurial technology companies like ours can come together and create some standards.

SM: I agree. The SEC needs to provide certain guidelines as to what format they want the data to come in. They need rules exception engines on their end to be able to take that data and monitor that data in real-time, so when such exceptions happen, they are able to track them.

SS: You are right. We are talking about the U.S. with the SEC – that is one regulatory body. If you go to France, Spain, and so on, the same problem exists. We really need global standards like we had with ACH and iACH in banking. We need global standardization around some of these regulations. You can take a country like Australia, for example, where they have very emerging regulatory requirements. Our platform is used today on all major continents except for Asia right now. We entered into Australia recently. The challenge there is that they have very few regulatory requirements. It is more about being prepared for this unknown future than about solving existing regulatory problems.

This segment is part 4 in the series : Thought Leaders in Cloud Computing: Interview with Skip Smith, COO of Confluence
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