The DTCC and six major banks are readying the launch of a know-your-customer (KYC) utility, Clarient Global, operator of the Clarient Entity Hub.
The DTCC and six major banks are throwing their hats into the race for know your customer (KYC) utility services as they ready the launch of a “centralized client reference data and documentation services utility,” Clarient Global, that will own and operate the Clarient Entity Hub.
The KYC services field is filling up with Markit I Genpact KYC Services, a joint venture from Markit and Genpact; Thomson Reuters’ KYC on-boarding and remediation managed service via the identity clearinghouse Accelus Org ID; and SWIFT’s centralized utility and repository Know Your Customer (KYC) Registry.
The Clarient hub service will target client onboarding and client lifecycle processes, and will be integrated with Omgeo’s Alert utility for standing settlement instructions (SSIs) and the DTCC’s Avox, a U.K.-based subsidiary providing business entity reference data services to financial services firms. In creating and developing Clarient, the DTCC enlisted the support of Barclays, BNY Mellon, Credit Suisse, Goldman Sachs, JPMorganChase and State Street.
FTF News recently spoke with Matthew Stauffer is the CEO of Clarient Global about the pending launch of the service.
Q: How did Clarient get started?
A: The DTCC and founder banks came together to create an industry utility to help address some of the challenges that we certainly see facing, not only the large local banks, but also their clients. We’re also addressing the continuing need for client data and client documentation to support not only on-boarding but the overall client lifecycle.
Each of the banks is certainly seeing this through the lens of increased regulatory changes and … to a regulatory landscape on the global basis that has required them to go back to their clients to collect additional information or refresh existing information.
So, as a result, what we certainly see is that this has become an area of not only operational complexity, but of operational cost, and also their need to look at it from a routine control perspective.
What we’ve done is work collectively across our partner firms, as well as others within the industry, to truly understand the pain points. Then we broke that down into various uses and requirements that could be addressed by a common platform, and a mutualized kind of utility model to help bring up some of the benefits.
Q: What do you think will make your offering different from the competition?
A: The Clarient Entity Hub is taking a slightly different approach. We take a comprehensive view of the legal entity, and of the data and document requirements that support that legal entity.
So, we see it as it is not just a KYC solution, but really a solution that helps to understand and manage the relationships between banks and their institutional clients. It also helps to provide guidelines around what content is to be collected and provided to help manage those relationships.
Ultimately, it can provide a management interface for institutional clients, asset managers, hedge funds and corporates to take ownership of their legal entity information, and have very strong controls around whom they make that information available to, and have a degree of transparency into processes that they haven’t had before.
Q: Could you tell me more about what you’re doing for the Legal Entity Identifier (LEI) effort? Also, you mentioned settlement instructions. Could you drill down on that too, please?
A: Clarient is looking to help establish the global LEI as the key identifier. We’re going to create a reference point against that and leverage our relationship with Avox, which is wholly owned DTCC entity. So, it’s to support that process given that they’ve certainly created a very robust database of publicly available legal entities that we’ll be able to leverage as part of establishing Clarient and establishing our overall data model.
In terms of standing settlement instructions (SSI) via Alert — which is owned by Omgeo — as it’s evolving into an SSI utility, we see a great opportunity to provide integration between Clarient, which brings a lot of the information around a legal entity and the associated documents, and a common view across SSIs that are maintained in Alert.
From the perspective of the data provider, [the integration] will make it very easy for them to view and manage the linkages between the SSIs as well as the broader set of information that needs to be provided [to]set up the accounts and the funds, and go through the on-boarding process.
Q: Among industry participants, are they essentially gathering the KYC data and then using it for multiple purposes?
A: I would say much of the information that is captured as far as client on-boarding, generally, is required for know your customer. But, it also can be leveraged for the broader set of data needs.
You begin to see common data elements, but more importantly a set of data documents all around that legal entity, and the specific relationships that the bank and broker dealer have with that entity.
That’s where by linking these pieces together we see a lot of value, by creating that integrated view, so that you ultimately are managing your client relationship. You can kind of drill into the legal entity and see the information all laid out so you can then act upon and across multiple areas within the bank and the broker dealers.
Q: You mentioned that the launch date is by the end of this year.
A: We’ve completed our release one development, and we’re in testing. We will move into a limited production rollout for our founders now through the remainder of the year. We will then go into a broader industry general availability release.
Q: What is the revenue model for this? How will you be charging for the service?
A: It’s very much established as an industry utility model. The consumer of the content will ultimately be the party paying the fees.
We do not foresee a fee structure for entities that provide content. We very much want to incent the take-up and provision of information into the controlled platform.
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