To help its Dutch pension fund clients meet the Financieel ToetsingsKader (FTK) regulations set out by the Dutch National Bank, Northern Trust has enhanced its investment statement reporting solutions.
The enhanced solution, designed in line with the Dutch National Bank guidelines, offers valuation data, cash-flow modelling and shock testing analysis to help pension funds demonstrate appropriate investment scrutiny, data integrity, and risk modelling as their investment process evolves.
Under the FTK regulation, Dutch pension funds are required to demonstrate a transparent approach to managing their assets and liabilities, in line with their investment decisions, in order to gauge sensitivity to market shocks and the impact this will have on pension scheme members.?
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“For many Dutch pension schemes focusing increasingly on liability driven investments and alternatives, these new requirements present a number of challenges,” said Frans Hofkens of the institutional investor group for Northern Trust in the Netherlands.
“By using a consistent suite of cash flow modelling assumptions and performance calculations, Northern Trust can deliver timely data and reporting to our clients, helping them meet their regulatory requirements.”
Northern Trust’s tailored solution for Dutch clients includes quarterly and annual statements, as required under the FTK regulation, as well as cash flows and prescribed shock tests at the asset level to provide exposure reporting.
This can be broken down by asset class and risk currency versus strategic benchmarks, looking through pooled investments to underlying assets, effective exposure on all derivative types, and performance and contribution reporting for each asset class
“Northern Trust’s solution models every market risk by asset type– from commodity investments to interest rate sensitivities,” said Simon Willcox, global head of performance product management at Northern Trust.
“We understand Dutch pension funds have unique regulatory challenges and by leveraging expertise from across our investment risk and analytics team, we can offer a fully integrated performance, risk and regulatory reporting suite of capabilities tailored to their specific requirements.”
Most recently, Northern Trust enhanced its collateral management and liquidity solutions in order to help clients meet the requirements of implementing various regulations, such as the US Dodd-Frank Act and European Market Infrastructure Regulation (EMIR).
