Hereen Pathak, CTO, Vestmark
Tom Huddleston – SVP, Natixis Asset Management.
Elba Cruz – Director of Overlay Portfolio Management, Morgan Stanley Smith Barney
Andrew Rose – VP, Redi2 Technologies
Josh Mayer – EVP, Managing Director Operations, EnvestNet.
13F/13G Reporting – under what conditions do you do the reporting versus requiring the model provider to do it?
As an overlay manager, Natixis is both a model receiver and model provider, Huddleston explained. They approach the reporting requirement by asking “who’s got discretion” for trading the models. In most cases, the model receiver has discretion, so they are responsible for 13F/13G reporting. Another reason is because it would be difficult for a model provider to have insight into how the model is being applied, he said.
Cruz disagreed and said that it is the model provider who has discretion. From a regulatory standpoint, it is up to the model provider to deliver the necessary information required for 13F/13G reporting. It is important for the model receiver to provide the information back to the model provider including details about how the model is being implemented, he said.
Mayer countered that it depends on the manager’s relationship with the program. The manager may have discretion based on prior agreements. In EnvestNet’s
program, model managers assign discretion to the ﬁrm. In a UMA world, there can be dual-discretion between the overlay manager and SMA sleeve
manager, since both may have some trading authority, he explained.