Q&A with Head of Rulefinder Shareholding Disclosure (SD), Faye Sutherland. We ask Faye about the integration of aosphere legal content into automated compliance solutions and aosphere’s relationship with the regtech providers behind those solutions.

Faye, firstly - what is Rulefinder Shareholding Disclosure?

It is an online service used by banking and asset manager clients to help them determine their major shareholding and short selling disclosure obligations around the globe. The idea for the service came after hearing from a number of financial institutions about their individual struggles in managing this complex area of compliance. They were using a mixture of in-house expertise and external legal advice to identify the rules and then bespoke IT solutions or excel spread sheets to apply those rules to their trading positions. It sounded like a manual time-consuming process.

As a result, aosphere worked with a panel of those financial institutions to design Rulefinder SD. The aosphere proposition tackled the need for individual clients to obtain detailed legal guidance across many jurisdictions, and keep it up to date. We designed an online product to explain the rules on a jurisdiction by jurisdiction basis.

And what happened next?

Clients were thrilled. They got better data, faster and they saved money. The product sold extremely well (we now have over 270 institutions using Rulefinder SD). Once clients had used the service for a few years some of them started to ask us about ‘rules engines’ and whether we could help build or develop those to make the compliance process even more streamlined.

What do you mean by rules engines?

In this context a rules engine is an automated system which combines the legal information from Rulefinder SD (e.g. the disclosure thresholds and calculation rules), market data (such as an issuer’s total shares outstanding) and a client’s trading positions. The rules engine takes all this information and produces a report indicating whether a disclosure needs to be made or where a threshold is close to being reached, and it can even prepare the notification to be sent to the regulator. This type of end to end solution eliminates the need for excel spread sheets and human input, thus reducing the likelihood of errors and operational risk.

Is this something that aosphere offers?

Not directly. We licence Rulefinder SD to regtech experts who provide automated solutions. Our expertise is in the law, we leave the technology to the experts!

Which companies do you work with and how does that relationship work?

We currently work with nine regtech vendors, who offer rules engine solutions to shareholding disclosure. Each solution is different: some offer cloud solutions, others are hosted, some are OMS vendors, others offer additional consulting services. The list of vendors is available to clients on request.

Are you involved in the rules creation process?

No. The vendor reviews the legal information from aosphere and uses it to write rule algorithms. The client buys this rules creation and maintenance directly from the vendor. The contract with a tech vendor will be ancillary and independent of the client’s relationship with aosphere. All our clients, whether they use a vendor or just use our legal content, have access to Rulefinder SD. That way, our clients can access the legal content and discuss the rules creation process with the vendor.

Do all clients have to use a rules engine?

No. Roughly 15-20% of our subscriber base use a vendor alongside Rulefinder SD. Many clients have designed in-house IT systems to support reporting obligations or rely on manual methods, so using a vendor is one option available to clients but definitely not a requirement.

What advice would you give to clients looking for a rules engine provider?

Spend some time thinking about your requirements (e.g. cloud vs installed solution), and research the different offerings - they are all unique. We would also recommend familiarising yourself with Rulefinder SD early on - after all it will be the legal source for the rules - and will help you understand how the vendors will create the rules.

We are very pleased to work with our rules engine providers - they enable our legal content to be used in innovative and practical solutions, making our clients lives easier.

Find out more about Rulefinder SD.