The Fund Ontology is an operational application of the Financial Regulation Ontology (FRO).

Semantic Compliance® is an ontological approach to regulatory reporting and oversight. The Fund Regulation Ontology defines semantic rules that implement laws and regulations of Dodd-Frank and the Investment Adviser Act. The prototype release determines adviser registration and filing requirements. A firm that meets the definition of an investment adviser must register with the Securities and Exchange Commission, unless its excluded, exempted or prohibited.

  • 15 U.S. Code § 80b–2 (a) 11 Definition of Investment Advisers
  • 15 U.S. Code § 80b–2 (a) 11 Exclusions from the definition (A) through (H)
  • 15 U.S. Code § 80b–3 (b) Exemptions from registration (1) through (7)
  • 15 U.S. Code § 80b–3a Prohibition of registration (small and mid-size State regulated advisers)
  • 17 CFR 275.203A-2 Exemption from Prohibition

Fund and Financial Regulation Ontology are open source. They align and extend the major domain ontologies for Finance and Legal:

Legal reasoning is the process by which regulators decide compliance cases.

The semantic web approach emulates the five pieces of the process:

Legal reasoning Financial Laws, Regulations and Data
Semantic compliance in finance
  1. Issue
    Must firm xyz register as an investment adviser with the Securities & Exchange Commission?
  2. Rules (LKIF)
    The text of the law and regulations is stored in FRO. An ontology module encodes the rules in a hierarchy of defined classes.
  3. Facts (FIBO)
    The relevant facts about the firm, services, managed companies, clients, assets under management are asserted in the ontology.
  4. Analysis
    The semantic Reasoner or inference engine subsumes firms to be a member of the defined classes based on the asserted facts.
  5. Conclusion
    The firms have a new property “regulated as” inferred. For example firm xyz is regulated as required to register (or excluded as a family office, exempted as a commodity trading adviser, prohibited as a small state regulated adviser).

You can download the ontology files or browse the documentation. Start with the FRO tutorial.