RegTech Safeguards

Independent verification layer and customized reporting for enterprise and family office clients ensuring portfolio compliance and risk management.

Independent verification for institutional peace of mind. Parallax's RegTech Safeguards provide an additional checking layer for enterprise and family office clients, offering independent verification of portfolio compliance, risk adherence, and customized reporting for boards, committees, and stakeholders.

Note:

Primary Use Case: Designed for enterprise asset managers, family offices, and institutional investors who need independent verification beyond their internal controls. Not a replacement for compliance systems—rather an additional safeguard layer.

The Independent Verification Layer

Why Another Checking Layer Matters

The Challenge: Even sophisticated investors with compliance teams can benefit from independent verification:

  • Internal systems may have blind spots or configuration errors
  • Single-vendor risk when all monitoring comes from one source
  • Need for independent attestation to boards and stakeholders
  • Regulatory benefits from demonstrating multiple control layers

Parallax's Role: We serve as an independent third-party verification layer that cross-checks your existing compliance monitoring with our own analysis.

Who Needs RegTech Safeguards

Family Offices

Challenge: Board reporting and multi-generational accountability

Solution: Independent verification reports for family investment committees

Value: Third-party attestation builds confidence with all family members

Enterprise Asset Managers

Challenge: Managing hundreds of client portfolios with varying mandates

Solution: Automated compliance verification across all client accounts

Value: Catch errors before they become regulatory issues or client disputes

Institutional Investors

Challenge: Fiduciary responsibility with regulatory oversight

Solution: Independent verification for board and audit committee reporting

Value: Demonstrate robust multi-layer compliance framework

Core Verification Functions

Investment Policy Adherence Monitoring

What We Check:

  • Position Size Limits: Verify no holding exceeds stated maximums
  • Sector Concentration: Confirm sector exposures within policy bands
  • Factor Exposure: Validate factor loadings match stated strategy
  • Risk Metrics: Ensure volatility, drawdown within policy tolerances
  • Geographic Limits: Verify international exposure within guidelines

How It Works:

  1. You provide your Investment Policy Statement (IPS) or portfolio guidelines
  2. We configure automated monitoring against those specific rules
  3. System checks daily against your policy parameters
  4. Alerts triggered when any policy limit is breached
  5. Reports generated for your compliance team, board, or committee

Note:

Example: Family office policy states "No single position >5%". One holding grows from 4.8% to 5.3% due to appreciation. Our system alerts the family office CFO within 24 hours with specific rebalancing recommendation.

Independent Risk Verification

Beyond policy compliance, we provide independent risk analysis:

Risk Metric Verification:

  • Cross-check your risk system's volatility calculations
  • Independent Value-at-Risk (VaR) estimation
  • Stress test verification using alternative scenarios
  • Correlation analysis with independent data sources

Why Independent Matters: If your primary risk system has a bug or miscalibration, our independent calculation catches it before it causes problems.

Real Example: Client's internal system showed portfolio beta of 0.85. Our independent verification showed actual beta of 1.15. Investigation revealed stale correlation matrix. Issue corrected before market downturn that would have caused unexpected losses.

Customized Reporting Functions

Board and Committee Reporting

Designed for executive presentation:

Monthly Board Reports:

  • Executive summary (1 page): Portfolio health, key metrics, action items
  • Compliance verification: All policy limits checked, exceptions flagged
  • Risk dashboard: Multi-dimensional risk metrics vs. policy bands
  • Performance attribution: Return sources and factor contributions

Quarterly Investment Committee Reports:

  • Comprehensive performance analysis vs. benchmarks and peers
  • Factor attribution showing strategy execution quality
  • Risk decomposition across all dimensions
  • Forward-looking scenario analysis and stress tests
  • Strategic recommendations for committee consideration

Annual Fiduciary Reports:

  • Full-year compliance attestation
  • Policy adherence verification across all periods
  • Risk management effectiveness review
  • Independent audit of investment process adherence

Stakeholder-Specific Reporting

Multi-Generational Reporting:

  • Age-appropriate summaries for different family members
  • Educational reports for next-generation investors
  • Simplified dashboards for non-financial family members
  • Detailed analytics for investment committee members

Governance Support:

  • Investment policy compliance verification
  • Independent attestation for family trustees
  • Multi-account consolidated reporting
  • Customized reporting frequency (monthly, quarterly, annual)

Privacy Controls:

  • Granular access controls by family member
  • Confidential reporting for sensitive positions
  • Secure document sharing and archiving

Implementation and Integration

Setup Process

Phase 1: Policy Configuration (Week 1)

  • Provide your Investment Policy Statement (IPS) or portfolio guidelines
  • Define specific limits, constraints, and monitoring parameters
  • Configure alert thresholds and reporting schedules
  • Establish stakeholder access and permissions

Phase 2: System Integration (Weeks 2-3)

  • Connect to your portfolio data sources (custody, PMS systems)
  • Configure data feeds and synchronization
  • Test compliance rules and verification logic
  • Validate reporting outputs with your team

Phase 3: Go-Live and Monitoring (Week 4+)

  • Activate automated daily monitoring
  • Begin receiving compliance alerts and reports
  • Regular reporting to boards and committees
  • Ongoing refinement based on feedback

Integration Options

Data Sources:

  • Direct custody account integration (Schwab, Fidelity, Interactive Brokers)
  • Portfolio management system APIs (Aladdin, Advent, Orion)
  • Manual file uploads (CSV, Excel) for custom setups
  • Real-time streaming for continuous monitoring

Reporting Delivery:

  • Secure web portal access for stakeholders
  • Automated email distribution on schedule
  • API access for integration with internal systems
  • Customized formats (PDF, Excel, PowerPoint)

Pricing and Availability

Note:

Enterprise Service: RegTech Safeguards are available exclusively for enterprise and family office clients. Minimum AUM requirements apply.

Pricing Structure:

  • Based on assets under monitoring and complexity of policies
  • Includes setup, configuration, and ongoing support
  • Customized reporting and board presentation materials included
  • Annual subscription with monthly billing available

To Get Started:

  • Contact our institutional team for consultation
  • Provide overview of compliance and reporting needs
  • Receive custom proposal and implementation timeline
  • Begin with pilot program before full rollout

Example Use Cases

Family Office Scenario

Client: $250M family office with 15 family members across 3 generations

Challenge:

  • Complex IPS with different risk profiles per generation
  • Monthly reporting to family investment committee
  • Need for independent verification beyond internal CFO

Solution:

  • Configured custom policies for 3 risk tiers (conservative, balanced, growth)
  • Automated daily monitoring of all family accounts
  • Monthly board report with compliance attestation
  • Quarterly deep-dive presentations to investment committee

Result:

  • Caught 3 policy breaches within first quarter (all corrected before board meeting)
  • Reduced board meeting prep time by 80%
  • Increased family member confidence through third-party verification

Enterprise Asset Manager Scenario

Client: RIA with $2B AUM across 450 client accounts

Challenge:

  • Each client has unique IPS and constraints
  • Manual compliance checking taking 20 hours/week
  • Regulatory exam found 2 undetected breaches

Solution:

  • Automated verification across all 450 client policies
  • Real-time alerts for policy breaches
  • Customized client reporting with white-label branding
  • Pre-trade compliance checking integration

Result:

  • Reduced compliance staff time from 20 to 2 hours/week
  • Zero policy breaches in subsequent regulatory exam
  • Clients appreciate independent verification reports
  • $250K/year savings in compliance staff costs

Limitations and Disclaimers

Note:

What RegTech Safeguards Are NOT:

  • Not a replacement for KYC/AML compliance systems
  • Not automated regulatory filing (we assist, not replace)
  • Not legal or compliance advice
  • Not a substitute for qualified compliance professionals

What We Provide:

  • Additional verification layer for investment policy adherence
  • Independent monitoring and reporting
  • Risk analysis and stress testing
  • Customized board and committee reporting

Learn how our RegTech safeguards integrate with Risk Management and Portfolio Analyzer to ensure comprehensive compliance across all portfolio activities.