Analysis is performed to ensure that issuers meet screening criteria.
Each client account’s guidelines are input into the monitoring systems by Guideline Monitoring. Information is categorized and rules are assigned based on the individual restrictions contained in the guidelines. Our compliance system has the flexibility to handle many types of restrictions; however, not all client restrictions are capable of automated monitoring. To verify that guidelines are coded completely and accurately within Sentinel, an additional review occurs. A secondary review is performed by a guideline monitoring analyst or manager to verify that investment restrictions set out in the guidelines have been accurately reflected in Sentinel.
We ensure that data used for the screening criteria is updated at least once a year.
The Guideline Monitoring team meets with our third-party ESG vendor on a quarterly basis to ensure the accuracy and the equality of the data being provided.
Automated IT systems prevent our portfolio managers from investing in excluded issuers or bonds that do not meet screening criteria.
Fidessa’s Sentinel contains the rules applied to each account that are tested by our compliance screening processes. Sentinel compliance screening can be performed on a pre-trade basis, in an overnight post-trade process, or both. Pre-trade screening takes place at the time the order is first entered into Wellington Management’s systems. For each restriction that returns a result on a pre-trade basis, the user receives a message detailing the issue and requiring the submitter to either alter the intended order or make a specific override decision. Override decisions for compliance issues are documented in the system and reviewed by Guideline Monitoring throughout the day. In the event that an exception is detected, the submitter may change the terms of the transaction and reenter the trade or may override the exception warning. If the override feature is used, the submitter must indicate a reason for that override. Guideline Monitoring reviews all portfolio management pre-trade overrides. Any issues are escalated accordingly.
Audits of fund holdings are undertaken yearly by internal audit or compliance functions.
Overnight screening is performed against each client portfolio’s end-of-day holdings. Results of the batch screening process are accessible to Portfolio Management teams and relationship management via the Intranet and are also reported out by Guideline Monitoring. Guideline Monitoring monitors results across all client portfolios and assists in the resolution of any issues identified by the screening process.
The purpose of the SOC 1 Report and PwC engagement is to conduct an examination of internal controls related to the processing of investment transactions as well as information technology controls. PwC’s examination includes procedures to obtain reasonable assurance that the controls included in the description are suitably designed to achieve the specified control objectives if those controls were complied with satisfactorily, and that the relevant aspects of such controls had been in place. PwC applies tests to specified control activities to obtain evidence of their effectiveness in meeting the related control objectives.