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Capital Markets Outlook 2013: Financial Transparency Gets Real

For Form PF, a Dodd-Frank requirement, firms must gather data from multiple sources, structure it, slice it according to how they believe the Securities and Exchange Commission will want to see the data, and file highly burdensome reports on deadline.

Focus In 2013: For firms that don't already have a strong data architecture, now's the time to establish one. Hedge funds and private equity firms should be nearing the finish line of preparations to file Form PF, given deadlines looming in the first and second quarter of next year. While vendors don't typically help firms aggregate the types of data they need to comply with Form PF, that's likely to change in coming months as vendors provide more complete solutions.

In addition to regulators, investors have become much more vocal in their demands for transparency. As such, firms will need to make sure clients can view information on risk metrics and management and performance measurement that are typically buried deep inside the walls of financial firms. They also must provide a complete view into analytics.

[MSRB Works to Further Transparency In Municipal Market]

Industry Leaders: JPMorgan's directors said they're considering lower 2012 bonuses for CEO Jamie Dimon and other top executives at the bank. Citigroup and Deutsche Bank have said they're rethinking their top executives' pay models. Deutsche Bank's co-CEO, Anshu Jain, said the bank would "make sure that the tone at the top is crystal clear." UBS said it reduced its bonus pool for 2011 by 40%, to $2.8 billion.

Elsewhere, the biggest hedge fund and private equity firms have already filed their Form PF documents to the SEC.

Technology Providers: Advent, SunGard and other vendors that already offer data management components may be best suited to providing full- fledged Form PF products.

Price Tag: It takes from four to six months for a typical large firm to prepare Form PF. Expenses include the cost of legal advice on how forms should be filled out and the work involved with aggregating data from multiple sources. The cost of compliance can range from hundreds of thousands of dollars to millions, depending on whether firms have their data management under control. Some firms have been asking how much they can claim back in expenses from their clients, but demand for transparency means they'll have to largely shoulder the financial responsibility, rather than transfer it to clients.

Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in April 2007, Melanie lived in Paris, where she worked for the International Herald ... View Full Bio

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