Welcome to the first edition of BBH in Brief, a newsletter dedicated to keeping you informed on what’s happening across BBH Investor Services.

As a firm, BBH strives for “excellence without exception.” It’s also something I’m personally passionate about. To ensure my colleagues and I are consistently delivering on this goal, we’ve been speaking with you, our clients and industry colleagues, about your experience of working with us. We’ve received invaluable feedback, including two key points that have resonated with me:

First, our clients are excited about the future of an independent BBH. We are too, and we are committed to that independence. Second, clients want to hear more from us! This newsletter is one way we are committing to share more information, more frequently.

As always, we value your feedback and hope you will tell us what you want to hear about in future issues of BBH in Brief. We’re excited for our next chapter together.

Chris Remondi
Partner, Global Head of Relationship Excellence
christopher.remondi@bbh.com
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What's Trending in the Industry?

Temperatures Rising

It’s clear that financial regulators have not had a summer slowdown. Here are some of the major regulatory policy updates currently exercising our clients' minds.

1. Liquidity Risks to the Fore

Globally, asset management focus remains on the work of the Financial Stability Board (FSB) and IOSCO and their continued focus on both open-ended fund liquidity management. Recently, in Ireland they held a stakeholder event to launch their respective consultations on liquidity risk and its management in open-ended funds. The broader consideration of whether or not mutual funds and other so called “non-bank financial intermediation” are a source of systemic risk has sparked a vociferous industry debate. Global regulators categorically suggest they are, whereas the mutual funds industry in unison vehemently oppose the thesis.

2. SEC’s Ambitious Agenda

In the U.S., the SEC has been relentlessly rolling out rulemaking and public consultations, so much so that industry bodies and even Chairman Gensler's fellow commissioners have suggested the agenda is overly ambitious and brings more uncertainty than certainty to investors and the market overall.

The prevailing SEC agenda items are both impressive and slightly controversial as the commission tries to grapple some pre-existing known issues, such as Money Market Funds Reforms, Filings for Exemptive relief for ETF share classes and cybersecurity rules, as well as some of the more forward tilted market innovations such as spot Bitcoin ETF applications, whether to address artificial intelligence through rulemaking or not. Most recently, Chairman Gensler indicated that the SEC is looking to pass regulation that would govern artificial intelligence in the securities markets, which would include algorithmic communications, nudges, predictive data analytics and AI-led recommendations from robo-advisors.

All of this and I haven’t yet mentioned the gargantuan shift that is U.S. T+1 settlement which is a topic of much ongoing debate and interaction across our global client base.

3. European Policy Remains Vibrant

Not to be outdone, Europe remains at the forefront of policymaking. The recently agreed EU-U.K. Memorandum of Understanding on Regulatory Cooperation in Financial Services gives opportunity for engagement between the two economic blocs to at last advance to a true post-Brexit relationship which has largely remained stagnant in recent years.

The EU Retail Investment Strategy is another “mega” package of market reforms which looks to fundamentally alter the EU funds landscape with a view to increasing participation, however one focus area, namely a fund costs benchmark has drawn most attention and it is suggested that such a benchmark is too blunt an instrument and could lead to less fund innovation and market choice as investors look too narrowly at investment options.

The work on the EU’s comprehensive ESG policy agenda continues with revisions to SFDR, the EU Taxonomy, ESG ratings and a host of other regulations. The first ESMA consultation on Markets in Crypto-Assets (MiCA) is now open until September 20 and is touted as the first comprehensive set of crypto-asset service regulations. I haven’t even mentioned a number of EU acronyms and some regulatory sequels that are also providing plenty of discussion points including ELTIF 2.0, DORA, MIFID, AIFMD 2 and EMIR 3.0.

Adrian Whelan
Global Head of Regulatory & Market Intelligence
adrian.whelan@bbh.com
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What's New at BBH?

BBH is investing in four key areas in 2023 and beyond, aligned to our clients’ goals. Below are some notable developments over the last quarter. For further detail on these and our other ongoing investments, contact your BBH Relationship Manager.

1. Talent & Expertise

  • At the end of June, we had made significant progress towards our goal of hiring 300 new BBHers in 2023, with a net increase of over 200 employees.
  • We hired 24% more employees this year vs. same period last year; and over 40% of those new hires joined us in mid to senior level positions.
  • Our Investor Services headcount is up 5.5% vs. the same period last year.
  • Increases in our training budget facilitated new technical and managerial training programs across our service delivery and relationship excellence divisions.
  • We’re proud of our 22% increase in participation across our diversity and inclusion community networks, BBHCares program, and Thrive Wellness program activities. Our Pride Month series included a panel discussion “LGBTQ+ Trailblazers: Paving the Road to Equality and Inclusion” with members of BBH’s Pride network and New York City’s youngest elected official and the first openly LGBTQ+ Afro-Latino member of the U.S. House of Representatives.

2. Supporting Our Clients' Product Innovation & Distribution

  • Alternatives: We’ve made enhancements to our production and data management application to both create operational efficiencies for our staff and enable data visualization, enhanced reporting and workflow management for our clients.
  • ETFs: We’ve completed global deployment of the next generation of our APEX (AP Exchange) ETF Order Taking platform. Clients, APs, and distributors benefit from new and enhanced functionality to advance order capabilities and improve user experience and workflows.
  • Transfer Agency: We are making ongoing enhancements across our TA offerings, deploying new capabilities and enhancements to Infuse TA. Updates made to our Investor Onboarding and Reassessments platform (IOBR) extend the scope of automated follow up emails to include reactivated accounts.
  • Fund Order & Custody: We deployed Phase 3 of Infuse mutual fund account opening, digitizing pre-account opening instructions and maintenance with an online experience on BBH Infuse.
     

3. Building Resilient Operations For Our Clients and BBH

  • Expansion of Artificial Intelligence and Machine Learning Capabilities: Recent releases in our internal AI/ML platform achieve greater scalability, resiliency and bring new user functionality to streamline our AI applications and better assess potential use cases. Increased use cases of smart alerts include checklist automation, dynamic alerting, and business workflow management.
  • Core Platform Enhancements: We have made multiple upgrades and enhancements across Custody, Fund Services, Transfer Agency, and our new Reporting Hub.
  • Custody: We’ve deployed enhancements to automate manual data entry and significantly reduce account opening times; to enhance our uninstructed positions process and our Positions Reporting Transaction and Collateral reports; and to enhance our KYC View system to improve resiliency, efficiency, and comply with heighted due diligence requirements in various jurisdictions.
  • Fund Accounting: We have completed multiple enhancements to our fund accounting platform, BBH STAR, to ensure continued resiliency and ability to scale, and to improve system performance with cash settlements.
  • Transfer Agency: We are making ongoing enhancements across our TA offerings, deploying new capabilities and enhancements to Infuse TA. Updates made to our Investor Onboarding platform (IOBR) extend the scope of automated follow up emails to include reactivated accounts.
  • T+1 Readiness Programs: We continue to support our clients T+1 readiness through presenting simulation reports on their data trends to highlight potential risks in a shorter settlement cycle and working to enhance automation of trade instructions, matching and settlement, to achieve better STP rates and reduce trade fails and repairs.

4. Data Servicing and Optimizaiton

  • Data Services: We expanded our managed data services to include a new offering that provides enhanced controls around the NAV oversight process. BBH consolidates data and calculates variances between multiple NAVs and synthetic NACVs, and highlights variances beyond a client defined threshold. This data service provides the client with a streamlined process for overseeing its daily NAV process.
  • Infomediary®: We’ve enhanced Infomediary and our InfoSuite, including improvements in functionality, processing efficiency, and user experience for InfoTrade, InfoNAV®, InfoAction™.
  • Industry Changes: ISO 20022 for cash statements is now live for early adopter clients. Leveraging Infomediary, Data Services, and Business Transformation tools (AI/ML) we are helping streamline operating models and adapt to the compressed settlement cycles associated with the upcoming move to T+1.

BBH Announcements

Some Recent Thought Leadership

More insights are available in our Insights Library.

  • ""

    T+1: 5 Steps to Seize the Moment

    Making tactical decisions at the expense of more strategic approaches would be a missed opportunity. Keith Haberlin shares how to optimize your operating model for shorter settlement cycles.
  • ""

    Private Markets: Learning a New Game

    As access to private markets funds broadens, alternative asset managers must adapt to a new ecosystem where simplification and investor education about access routes are key. BBH’s Lata Vyas spoke on the topic at FundForum and shares further insights.

Where You Can Find Us

Some key conferences over the next quarter:

Out and About

Our teams have been busy! Here they are at the Luxembourg Private Equity Networking Cocktail, the BBH/New York Stock Exchange ETF Event, BBH Ireland's ETF Investor Survey Event, FundForum 2023, and The Network Forum Annual Conference.

Brown Brothers Harriman & Co. (“BBH”) may be used to reference the company as a whole and/or its various subsidiaries generally. This material and any products or services may be issued or provided in multiple jurisdictions by duly authorized and regulated subsidiaries. This material is for general information and reference purposes only. This material may not be reproduced, copied or transmitted, or any of the content disclosed to third parties, without the permission of BBH. All trademarks and service marks included are the property of BBH or their respective owners. © Brown Brothers Harriman & Co. 2023. All rights reserved. IS-09110-2023-07-20

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