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2021 Open Protocol Update: ESG and Digital Assets

By October 28, 2021 No Comments

In October, the co-chairs of the Open Protocol Enabling Risk Aggregation (OPERA) – Albourne and the Standards Board for Alternative Investments (“SBAI”) – announced updates to the Open Protocol risk reporting framework, including a new module for potential ESG risk exposure and a tab for Digital Assets reporting.

According to AlphaWeek, “The new ESG module enables investors to better understand the potential ESG profile of their portfolio as a starting point for further discussion with investment managers. The new tab for Digital Assets allows investors to assess their exposure to different types of digital assets and changes in allocation over time. The data can be aggregated across funds, thereby providing investors with an overall understanding of exposure.”[1]

  • Digital Assets – (New – Template 13)
    The new Digital Assets tab of the Open Protocol report will help investors understand their exposure to different types of digital assets (i.e., cryptocurrencies versus stable coins), instrument types and liquidity, as well as changes in exposure over time.
  • ESG – (New – Template 14)
    The ESG module in Open Protocol draws upon existing sector exposure data within the Open Protocol framework such as equity, credit, convertible bonds, sovereign and interest rate exposure, real assets and commodities. The ESG module aims to capture data that can facilitate mapping to an investor’s ESG framework of choice. As such, equity, credit, and convertible bond exposure should be aggregated at a GICS sub-industry level, sovereign and interest rate exposure should be reported at a country level, and real assets should be reported at a commodity, timberland, real estate and infrastructure level.

Implementation

Funds are expected to make the switch to the 2021 Open Protocol template after the conclusion of a six month implementation period. A list of investment strategies that must be reported under the updated template include: 


Source: https://www.sbai.org/toolbox/open-protocol-op-risk-reporting/
(The design team will recreate this image from scratch)

OPERA and IVP Managed Services

Coupling IVP Managed Services with IVP Raptor helps fund managers save cost and time. With this, IVP takes on the responsibility of data sourcing, data cleansing, template creation and form population (as per required logic), and provides first level approvals before final sign off is required from fund managers. IVP’s team of compliance and business experts also work directly with regulators to address any discrepancies in reporting interpretations, while providing managers with report comparisons and a complete audit trail.

To learn more about IVP Raptor, visit https://www.ivp.in/portfolio/ivp-raptor/ or contact us at sales@ivp.in to schedule a live demo.

[1] Greg Winterton, “Open Protocol Expands To ESG and Digital Assets,” AlphaWeek, October 5, 2021.

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