InSPire platform debuts due diligence function

Inspire has launched inSPire Due Diligence, the industry’s first utility focussed on the ‘Know Your Distributor’ due diligence process. The new functionality is now live, producing distributor due diligence for global investment banks.

The utility offers a shared centralised resource to facilitate the flow of due diligence information between distributors and permissioned issuers. inSPire Due Diligence agreed a common standard for Due Diligence Questionnaires (DDQs) and provides a centralised team of structured product specialists who collect, produce and monitor the due diligence data on behalf of participating structured product issuers, mutualising benefits of a centralised industry solution.

In order to develop the new tool, the platform’s product governance team designed, consulted on and administered the governance frameworks at a number of top investment banks.

“Using the team’s expertise, we designed the due diligence template and worked with four banks to agree the common distributor due diligence questions and the utility operating procedures (how we gather, validate and challenge that information),” said Oliver Perry (pictured), head of due diligence at inspire.

“When a bank requests due diligence on a particular distributor, we pre- populate the questionnaire from publicly available sources, the research conducted by our team and inputs gathered from the distributor. Once we have the final version, we ask the distributor to sign it off and provide their consent to share that Due Diligence Questionnaire (DDQ) with the relevant manufacturer. We then continue to work with the distributor to ensure the information is reviewed periodically and continues to be accurate and complete.”

By using the utility’s centralised team to produce DDQs to a common standard, manufacturers and distributors can save a significant amount of time, resource and effort, added Perry.

Wider vision

Mifid 2 has crystallised regulatory expectations and placed new obligations on issuers and distributors to evidence appropriate due diligence and information sharing to satisfy ‘Know Your Distributor’ requirements. Without an industry standard for DDQs, the industry is needlessly duplicating effort to design, populate and remediate DDQ forms in-house, according to Mark Aldous, managing director at inSPire.

The inSPire Due Diligence function will transform this, eliminating the duplication of DDQ design, production and monitoring by significantly speeding up the process for issuers and distributors who can re-allocate internal resource to higher value work.

 “This new utility represents part of a much wider vision to use our track record as trusted structured products experts to bring the market together, creating common standards, mutualising costs and generating efficiencies,” said Aldous. “InSPire Due Diligence is delivering much needed standardisation and streamlining of processes that deliver enhanced due diligence and service levels. Issuers who use the utility receive comprehensive Due Diligence produced to a market leading standard. For Distributors it will reduce their administrative overheads when responding to multiple issuer requests for the similar information throughout the year.”

InSPire’s Due Diligence utility is the result of collaboration between its specialists and leading investment banks to agree a common template, process and standards. The new tool has been designed to minimise the resource impact on both issuers and distributors and comes on the heels of recent developments at inSPire’s structured products managed services business. This includes the launch of inSPire Direct, an end to end structured product issuance platform, at the end of 2018.