The many brand new regulations introduced since the financial crisis have created massive increases in the level of operational complexity and compliance overhead, particularly in managing client reference data and onboarding processes. New suppliers are entering the market providing centralized, secure platforms to access, manage and store critical data in a single location which enable their users (counterparties) to comply with the rapid growth in new legislation and amendments to existing legislation.

Clarient Entity Hub 

Clarient Global LLC is an industry owned and governed data and document utility providing the Clarient Entity Hub (CEH) which enables participants in today’s financial services market to standardize the collection and distribution of the entity information required for regulations such Know Your Customer (KYC), Anti-Money Laundering (AML), and Foreign Account Tax Compliance Act (FATCA), Dodd-Frank, and EMIR regulations. It was developed by Clarient working with six leading banks*. The CEH uses DTCC’s suite of reference data assets — including Avox and Omgeo ALERT — to deliver, Clarient claim, an integrated, comprehensive client data management and onboarding solution.

Unique features of the service is the linking of client data and accounts with other DTCC data management services, including trading, settlement, and reporting, and the integration of the DTCC Client Reference Data and Enrichment (CRDE) service, incorporating approximately 20,000 legal entity records and 4,000 counterparties.

The CEH is designed to streamline the interaction between industry participants, enabling both the financial services providers of information (i.e. investment managers, hedge funds, corporates) and the consumers of that information (i.e. banks, investment managers, hedge funds, corporates) to mitigate risk and reduce the cost of maintaining client reference data. It enables all participants to collect, validate and control client data as efficiently as possible throughout the life cycle of their relationship, see figure.

Clarient Entity Hub service

Source & Copyright©2015 - Clarient Global LLC

How CEH works and likely users

Providers, e.g. a corporate, securely upload, permission, maintain, store and distribute data and documents on the CEH. The upload takes place through a web based interface. There is complete transparency in the process and suppliers of the data (consumers) have control of who has access to their information (permissioned). Consumers and Providers (participants can have either role) are expected to include:

1. Banks
2. Broker/Dealers
3. Custodians, Third Party Administrators & Service Providers
4. Transfer Agents
5. SEFs and Trading Platforms
6. Central Security Depositories, Stock Exchanges and other Market Infrastructure
7. Asset Managers / Investment Advisors
8. Hedge Funds, Private Equity and Venture Capital Funds
9. Corporates.

CEH charges

The Consumers, the parties e.g. banks, consuming the data are charged for the service. Corporates, acting as providers, are not charged even though they improve their workflows, and cut their documentation management costs considerably.

CEH full launch

At moment the CEH is fully live with a number of founder members and their asset manager clients. Clarient plans to make a general launch of the service in June 2015.

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* BNY Mellon, Barclays, Credit Suisse, Goldman Sachs, J.P. Morgan, and State Street.

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CTMfile take: The nightmare of it taking 3-9+ months to open a bank account or any account has to be solved. However, the Clarient Entity Hub service shows that it is not just opening bank accounts that should be covered by these services. Client data management services need to cover all types of financial services, all accounts and all stages in client relationship life cycle. The KYC services market just got real; it is simply a small part of the whole client data management process.

Third party client data management services are coming. Banks and other financial service suppliers will expect corporates to use them. For corporate treasury departments the CEH service raises several critical questions which include: should they use a third party service for their critical data? If so: what type of service? a single service or more than one service? AND, above all, who do they trust?