Views on improving the integrity of global capital markets
16 November 2016

CFA Institute Asset Manager Code: New Compliance Platform and Annual Notification

Posted In: Asset Manager Code

The 21st Annual GIPS Standards Conference will be held 14–15 September 2017 in San Diego, California.

Complying with the CFA Institute Asset Manager Code has become easier and more efficient than ever. Ron Peyton, chairman and CEO of Callan Associates and current Chair of the Asset Manager Code Advisory Committee, joined me at the recent sold out 2016 Annual GIPS Standards Conference where we introduced an exciting new resource for assisting firms seeking to become compliant with the Code. We also discussed annual notification of compliance, a new initiative that will make compliance with the Code more rigorous and meaningful.

New Compliance Platform

In a joint effort between CFA Institute and the Regulatory Compliance Association (RCA), we developed the Compliance Transparency Platform for implementing the CFA Institute Asset Manager Code.

As described in a previous post, the Asset Manager Code implementation platform offers 40 step-by-step tutorials and RCA’s 350-page Model Compliance Manual to greatly reduce the time, effort, and expense of implementing the Code. Each tutorial covers a particular area of the Asset Manager Code. The tutorials bring together experts on the Code with representatives from firms that have already implemented the Code and who provide practitioner experience on its implementation. This resource is an exciting new educational tool and an excellent way for firms to get practical advice on implementing the Asset Manager Code as well as greatly reduce any hurdles of coming into compliance with the Code. We believe that the implementation platform will go a long way toward increasing compliance with the Code among asset managers.

RCA is a nonprofit educational organization that supports a community of more than 80,000 compliance, legal, and operations executives from regulatory authorities, institutional investors, and alternative investment and asset management firms with a variety of educational programs. The implementation platform is part of RCA’s Compliance Transparency program.

Promotion and Annual Notification

Our current promotion efforts, which include outreach to significant investors and asset owners, has led to the “Open Lettercampaign. Under this initiative, influential pension plan sponsors publicly signed a letter expressing their support for the Code, and the letter was published in the Wall Street Journal, Pensions & Investments, and other publications to coincide with the 2016 CFA Institute Annual Conference. The goal of this initiative is to raise awareness of the Code among investment managers by showing that distinguished asset owners are interested having their managers adhere to the standards set forth in the Code.

Finally, we announced the change of requiring firms to annually renew their claim of compliance with the Asset Manager Code. Currently, firms must notify CFA Institute of their claim of compliance only when they initially make the claim.  In the early days when CFA Institute was introducing and promoting the Code, annual notification might have been perceived as a barrier to accepting the Code as a new standard. Now that the Code is well established, we believe annual notification will not be a deterrent to compliance. Moving to annual notification will strengthen the Code and provide several advantages. Annual notification furthers the goal of the Asset Manager Code being seen as industry best practice for professional conduct, and it signals to firms and investors that compliance with fundamental ethical standards is not a “check the box” or “one and done” proposition but an ongoing process of continual commitment to ethical practice and working for clients’ best interest. It is the next step in strengthening the meaning of compliance with the Code for both firms and investors.

Annual notification will ensure that the information CFA Institute has about firms that claim compliance is regularly updated and that firms who ceased operations, merged with other firms, or claimed compliance years ago but no longer do so (and did not notify us) are dropped from the list of complying firms. It will also regularly update our contact information for compliant firms, which will allow CFA Insitute to easily reach firms when updates to the Code occur or to inform them of other CFA Institute initiatives (such as the Asset Manager Code implementation platform available from RCA) that might be of interest.

We are implementing changes to the online notification form to allow firms to easily provide updates to their information rather than fill out the form every year in order to increase convenience and improve the customer experience. We expect this process to be implemented in the first half of 2017, and claiming compliance will require annual notification thereafter.

To date, close to 1,400 firms have adopted the Asset Manager Code, which includes 35 firms, subsidiaries, or affiliates of firms, that are listed in the Top 100 global asset managers.

Please visit our website for more information about the Asset Manager Code.

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About the Author(s)
Jon Stokes

Jon Stokes was the Director of Ethics and Standards Education at CFA Institute. His responsibilities included design and creation of on-line ethics education, development and maintenance of the CFA Institute Code of Ethics and Standards of Professional Conduct, and the design and management of the CFA Institute Ethical Decision-Making and Giving Voice to Values education programs. Stokes holds a JD degree.

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