Broadridge partners with Apex Silver on integrated tax reporting

The new service combines tax data and cost-basis reporting into a single offering for banks, broker-dealers and custodians.

Broadridge Financial Solutions is partnering with Apex Silver to launch a new product it believes can help financial services firms reduce costs associated with tax season.

Broadridge has long provided tax data and reporting, producing the forms that are sent annually to clients, account holders and regulatory authorities. Bringing cost basis reporting from Apex Silver, which was Silver Management Group of Cos. before Apex Fintech Solutions acquired it in 2021, introduces a common data sourcing and managing model for banks, broker-dealers, custodians and large registered investment advisors.

Rather than rely on multiple vendors for various aspects of tax reporting, outsourcing to Broadridge and Apex Silver’s integrated system can help firms reduce costs while remaining current with changing tax regulations, higher transaction volumes and new asset classes such as cryptocurrencies, said Thomas Burke, president of Broadridge Tax Services.

“Bringing these two together solves a couple of problems,” Burke said. “It certainly solves the costs associated with managing multiple systems, but it also brings greater efficiencies to the challenges associated with tax season.”

Broadridge and Apex Silver have worked together for several years, have mutual clients and have already built integrations. Bringing them together in a more official capacity allows them to expand further, he added.

“You don’t often think about tax reporting as an innovative industry. I think it’s truly ripe for disruption, Burke said.

Legislation passed in the wake of the global financial crisis required brokers to provide cost-basis reporting to clients. Firms at the time had to scramble to put together an in-house solution to meet the compliance deadline, but more than a decade later are finding the systems are struggling to keep up with changing regulations, said Blake Henry, CEO of Apex Silver.

“The solutions that worked a decade ago, some of them no longer work. Others are just strained and they’re at the brink,” Henry said. “Firms can either invest another $10 million and try to bring [existing systems] up [to date], or outsource it for much less than that.”

At the same time, trading volume has skyrocketed for brokerages after the elimination of commissions and the embrace of automated rebalancing, adding complexity to how cost basis is calculated, he added.

“As more and more firms are looking for ways to compete around tax-loss harvesting and tax alpha in their decision-making, the capabilities we’re putting together will help facilitate having that timely information,” Henry said.

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