By David Turmaine, Head of International at Broadridge Consulting Services, and Maria Siano, Head of International Strategy at Broadridge.

Today’s digital world is increasingly complex, characterised by interconnected systems and data that is stored, and widely shared, online. Looking through a financial services lens, cyber threats and incidents are becoming more sophisticated, posing significant risks to financial stability and security.

The number of attack vectors has multiplied in line with the growing reliance on technology and associated spike in remote and decentralised working since the pandemic. A recent survey by the BCI, the global body for resilience professionals, revealed three-quarters of respondents had seen a rise in attempted breaches over the last year, with nearly 40% the victim of a successful cyber-attack.

The system modernisation and digitalisation journey that firms around the world are now undertaking, often to align with market developments such as the shortening of the settlement cycle to T+1, is filled with risks – which has led to a heightened regulatory focus on cybersecurity and operational resilience.

Against this backdrop, the EU’s Digital Operational Resilience Act (DORA) has come into force and in-scope firms – such as banks, investment firms, and designated fintechs – must be compliant from January 17, 2025.

DORA seeks to establish a clearer foundation for security and operational resilience in the financial services sector, while also aligning with other EU measures on cybersecurity and data. It is the most comprehensive resilience regulation currently yet seen in this space, but the thinking is reflected by other jurisdictions around the world, with regulators increasingly demanding that financial institutions bolster their operational resilience.

Japan, for example, has introduced the Economic Security Promotion Act (ESPA), whilst the Australian Prudential Regulation Authority (APRA) has published a new Prudential Standard (CPS 230 Operational Risk Management) that will direct how regulated entities manage operational risks, resilience, and business continuity. In July 2023, the US Securities and Exchange Commission (SEC) adopted rules requiring registrants to disclose material cybersecurity incidents.

What are the main components of DORA?

DORA is the most in-depth regulation to date aimed at strengthening cybersecurity amongst financial institutions.

It is seen as a means of compelling more firms to work internally, and with their third-party information and communications technology (ICT) service providers, to improve their threat assessments, cyber incident management, and overall resilience. It is also a positive step towards a more harmonised EU framework that will enhance the digital operational resilience of financial services across the region whilst preventing widespread contagion that could undermine the financial stability of the bloc.

DORA is structured around five pillars, which cover governance, resiliency, incident management, and reporting. A common thread is the protection of data as it passes through both a financial institution and then the ecosystem around it, such as vendors.

The first pillar is ICT risk management, which mandates firms to implement robust risk management practices for their systems to prevent cyber-attacks and disruptions. They must also develop and maintain effective recovery and continuity plans to ensure the uninterrupted provision of critical financial services in the event of a cyber incident.

The second pillar is incident management, with DORA requiring entities to establish and maintain robust mechanisms for identifying, classifying, and recording incidents. Additionally, financial institutions will be required to report significant incidents to regulators within a tight timeframe to ensure timely responses and coordination.

The third pillar is digital operational resilience testing, and here we see some of the newer demands that firms must now quickly familiarise themselves with. Firms must conduct regular resilience testing to verify the effectiveness of their digital resilience strategies, and this includes advanced threat-led penetration testing at least every three years to address higher levels of risk exposure. Test results will need to be sent to the regulator for validation and approval.

The fourth pillar relates to third party risk management and oversight. Recognising that the digital operations of many organisations are closely intertwined with third party providers, DORA puts an emphasis on managing the risks associated with these external partners. Firms will be expected to conduct enhanced due diligence on their providers and include provisions in their contracts to ensure they also comply with strict digital resilience standards.

The final pillar outlines the importance of sharing information and intelligence about cyber threats and vulnerabilities amongst organisations. By creating a more collaborative environment, the hope is firms can tap into a wealth of knowledge and experiences, building their capacity to predict and address challenges. This collective understanding can foster the creation of effective policies and proactive strategies, ultimately improving the digital resilience of individual organisations and the financial industry as a whole.

The key steps to building operational resilience

DORA will place further pressure on firms to implement better cybersecurity measures and bolster their operational resilience in the coming years, but it is already front of mind for many in the financial services industry.

Broadridge’s 2024 Digital Transformation & Next-Gen Technology Study highlighted that in the next two years, financial firms will boost their investments in cybersecurity by nearly a third (28%). Furthermore, cybersecurity is the top capability that executives expect from their technology vendors, outpacing their ability to deliver projects on time and on budget.

As we look towards the DORA compliance date next January, what steps should firms be taking to build up their operational resilience?

It is crucial to assess existing business practices and processes, and identify the gaps, when it comes to meeting the DORA requirements. This will enable firms to create a robust roadmap for compliance whilst implementing stronger ICT risk management practices.

The first thing for firms to do is to ensure they fully digest and understand the regulation, and how it impacts their business model. They can then correlate that against what is already in place for their operational resiliency. Firms then need to identify their risk factors and map them against DORA, as well as their existing enterprise risk framework.

These steps will allow firms to effectively carry out their remediation planning. Resiliency in the past has typically been quite inward looking, with a focus on ensuring their own house is in order. DORA shifts the dial and will mandate them to now extend this externally across third party vendors and strategic partners, analysing the critical paths for the critical functions, whether that is trade data, settlement data, or any other element.

Firms will need a complete line of sight so they can take an informed risk decision on each of their current resiliency stances and provisions in order to make sure they are compliant with DORA.

For larger firms, their size will make it more difficult to locate the risks. They will often have hundreds of internal applications and platforms they will need to dissect to understand the interdependencies and find the critical paths that hold the data. They will also need to ascertain the risks across their vendor community.

For smaller firms, the challenge will be finding the right people to guide this, who can do it alongside their day job. They may struggle to get this project shaped and delivered on time. And they should not underestimate the resources needed to do a thorough analysis and then implement the changes DORA requires. They will also need to effectively ensure ongoing regulatory compliance, which can be costly.

Continuous improvement is an objective of DORA. Some elements of the regulation are prescriptive in terms of duration and frequency – such as annual testing of all critical ICT systems, and the advanced threat-led penetration testing every three years. But it will also be important for firms to make sure they refer back to the regulation and remain compliant whenever they change their IT footprint by acquiring new technology, which potentially introduces new vulnerabilities.

Unlocking new benefits

Whilst the journey towards DORA compliance is complex, it is also one that can unlock significant benefits for ambitious financial services firms.

This includes improved cyber defences; DORA will help financial institutions to enhance their cybersecurity measures and protect their critical systems and data from increasingly sophisticated cyber threats.

By improving long-term operational resilience, DORA can also help to reduce the financial impact of cyber incidents and other disruptions, ultimately saving organisations from costly recovery efforts.

Financial firms can instil greater confidence amongst their customers and stakeholders by demonstrating their ongoing commitment to safeguarding digital assets and services. And, perhaps most importantly, given the increased interconnectivity of firms, DORA can drive greater resiliency across financial markets as a whole. It can help to safeguard the stability of the whole, as well as its parts.

The post DORA: Preparing the Pathway to Enhanced Operational Resilience appeared first on A-Team.

The Adaptive Intelligent Document Processing product will enable financial institutions to automate the extraction of unstructured data for ingestion into their systems. The London-based company said this will let market participants automate a choke-point that is often solved through error-prone manual processes.

Duco’s AI can be trained on clients’ specific documents, learning how to interpret layout and text in order to replicate data gathering procedures with ever-greater accuracy. It will work within Duco’s SaaS-based, no-code platform.

The company won the award for Best Transaction Reporting Solution in A-Team Group’s RegTech Insight Awards Europe 2024 in May.

Managing unstructured data has become a key goal of capital markets participants as they take on new use cases, such as private market access and sustainability reporting. These domains are largely built on datasets that lack the order of reference, pricing and other data formats with which it must be amalgamated in their systems.

“Our integrated platform strategy will unlock significant value for our clients,” said Duco chief executive Michael Chin. “We’re solving a huge problem for the industry, one that clients have repeatedly told us lacks a robust and efficient solution on the market. They can now ingest, transform, normalise, enrich and reconcile structured and unstructured data in Duco, automating data processing throughout its lifecycle.”

The post Duco Unveils AI-Powered Reconciliation Product for Unstructured Data appeared first on A-Team.

By Osvaldo Berrios, SME, Compliance, NICE Actimize.

The financial services industry is undergoing a transformative shift, with artificial intelligence (AI) playing a central role. Investment firms are starting to explore the potential of Generative AI (GenAI) to enhance their business dealings, particularly in the areas of monitoring, surveillance and regulatory compliance.

Monitoring and Surveillance

One of the primary areas that GenAI provides value to investment firms is detecting anomalies. GenAI can be trained on historical data to identify patterns of normal advisor activity which can then detect aberrant activity. This allows firms to detect potential red flags, such as unusual trading patterns or suspicious communication with clients, much faster than traditional methods.

By generating realistic hypothetical scenarios, GenAI can help firms test and refine their surveillance processes. This can be particularly valuable in areas like fraud detection and market manipulation. GenAI can automate the creation of reports on advisor activity and potential compliance issues. This frees up human compliance staff to focus on more complex investigations.

The effectiveness of GenAI models is highly dependent on the quality and quantity of data used for training. Biased datasets can lead to biased AI models, potentially amplifying existing inequalities in the financial system

Compliance with Regulations

Regulatory Document Generation is another key role played by GenAI techniques. GenAI can be used to generate regulatory reports and other compliance documents, saving firms significant time and resources. And since regulatory landscapes are constantly evolving GenAI can be trained to stay updated on new regulations and identify potential compliance risks associated with new investment products or strategies.

GenAI can also personalize compliance training for advisors based on their specific risk profiles and areas of expertise.

Challenges and Considerations

While GenAI offers exciting possibilities, implementing it effectively requires addressing some key challenges. The effectiveness of GenAI models is highly dependent on the quality and quantity of data used for training. Biased datasets can lead to biased AI models, potentially amplifying existing inequalities in the financial system. Understanding how GenAI models arrive at their conclusions is crucial. Firms need to ensure these models are transparent and explainable to maintain trust and mitigate potential regulatory concerns.

GenAI is a powerful tool, but it should not replace human expertise. Firms still need experienced compliance professionals to interpret AI outputs and make informed decisions.

Negative Aspects

Is job displacement an issue today? Automation through GenAI may lead to job losses in compliance departments. This necessitates retraining and upskilling existing staff to adapt to new workflows. There may also be a potential for misuse. Like any powerful technology, GenAI could be used for malicious purposes such as generating fraudulent documents or manipulating markets. Robust security measures are crucial to mitigate these risks.

The Road Ahead

GenAI holds immense potential for investment firms to enhance their monitoring, surveillance, and compliance capabilities. However, successful implementation requires careful consideration of data quality, bias, explain ability, and the role of human oversight. As technology matures and regulatory frameworks adapt, GenAI is poised to revolutionize how investment firms manage their business dealings and navigate the ever-changing regulatory landscape.

For more information on NICE Actimize’s applications for capital markets, see: https://www.niceactimize.com/financial-markets-compliance/.

The post Investment Firms Embrace Generative AI: A Boon for Monitoring and Compliance appeared first on A-Team.

The RegTech Insight Awards recognise established providers and innovative newcomers that offer solutions that are successfully improving firms’ ability to respond effectively to evolving and ever more complex regulatory requirements across the global financial services industry. Winners are selected by A-Team Group’s independent, expert advisory board in collaboration with its editorial team.

Chris Dingley, chief executive of Single Rulebook, spoke to RegTech Insight about the importance of winning this award and explained why and how Single Rulebook was developed and outlined the benefits it can deliver.

A-Team: What does winning A-Team Group’s 2024 RegTech Insight Europe award for Best Solution for Regulatory Change Management mean to Kaizen?

Chris: We are delighted. It’s recognition for all the hard work and effort that our team has made over the last year to develop the platform further and it also recognises the unique Law Compare solution that we have developed with Linklaters, which makes it easier for firms to manage not only regulatory change but also differences in regulation across jurisdictions.

A-Team: What types of capital markets clients does Single Rulebook work with?

Chris: Single Rulebook is a software solution that enables clients to search, share and manage regulatory rules on one digital platform. It was established with the aim of making regulation manageable and easy.

Through powerful and dynamic rule maps, Single Rulebook’s user interface promotes collaboration, and information sharing.

It is especially helpful to banks, asset management companies and law firms – enabling them to work more efficiently with changes and updated to financial regulation. More than just a search tool, the platform also integrates with a client’s own systems and delivers an audit trail of regulatory change and decision making, saving time and cost.

A-Team: What challenges are these clients facing?

Chris: There are three main challenges:

• Ever-changing and new regulations: Global regulation is continually evolving. Not only are new rules introduced but existing rules are continually tweaked and updated. It can be time consuming trying to locate a specific piece of regulation and ensuring it’s the most recent version.
• Sharing and collaborating effectively on regulation: Legal interpretations of regulatory rules need to be kept up to date, shared and communicated across large organisations which can become unmanageable and a company’s view of regulation can change over time.
• Keeping an audit trail of regulatory interpretations and implementation: Firms must demonstrate compliance with each applicable rule and their pathway to regulatory compliance. Some leeway is provided in the initial period after a new piece of regulation is introduced, however regulators’ expectations become more stringent over time and it’s important to be able to demonstrate immediate compliance to auditors and regulators. Spreadsheets and email chains are not effective tools for showcasing a firm’s regulatory interpretations and the implementation of rules. It’s important to demonstrate operational change and regulatory compliance efficiently and Single Rulebook can do this digitally and in real-time.

A-Team: How does Kaizen help customers address these challenges?

Chris: Single Rulebook provides one digital source for regulatory research, making life much easier for legal and compliance teams, with employees able to retrieve regulatory text and rules quickly and efficiently.

Single Rulebook uses natural-language processing to improve many workflows and processes so that regulatory opinion and interpretations can be shared and accessed digitally on one common platform. It provides the functionality to annotate regulation so that the company’s approved stance can be accessed by all team members.

In 2023, we developed Law Compare in conjunction with Linklaters to support their in-house teams and provide their clients with quick and easy access to regulatory comparisons and guidance on the differences and changes brought about by diverging EU and UK MiFID II regimes.

The online Law Compare tool provides a single authoritative source of the most up-to-date regulation and guidance, and offers full coverage of EU and UK MiFID II regimes, from Directives, Regulations, Regulatory Technical Standards to Level 3 guidance, with the potential to extend to other areas of regulation. The legislation hosted on the Single Rulebook platform is complemented by Linklaters’ guidance which provides an invaluable record of the firm’s legal views, interpretation and comments relating to specific provisions and areas of EU-UK divergence.

A-Team: How will you develop the solution over the next year?

Chris: The year ahead will see further regulatory change across many global regulations, particularly in the UK and Europe, with the EMIR Refit and upcoming amendments to MiFID II.

It’s essential that firms can not only keep abreast of these changes but also compare versions. We’re looking forward to continuing to help our clients manage regulation and make it easier for them to navigate the changes ahead. We also have lots of exciting developments and new projects in the pipeline for Single Rulebook, which we will be sharing over the course of the coming months.

The post Kaizen’s Single Rulebook Wins Award for Best Solution for Regulatory Change Management in A-Team Group RegTech Insight Awards Europe 2024 appeared first on A-Team.

“It has been a humbling period for many firms, dealing with the isolating challenges of adapting to the EMIR Refit” says Paul Rennison, Director, Corporate Strategy at deltaconX, and a panelist on A-Team’s upcoming Best Practices in Regulatory Reporting webinar on July 16.

According to Rennison, deltaconX has its origins in a post-trade project that led its founders to conclude that the back office should be built around data rather than around process. The developers decided to build a regulatory reporting tool from the bottom up that was based on data and configuration rather than coding and adding regulation after regulation.

Fast forward to today, and the company boasts a diverse client base of primarily sell-side firms as well as buy-side institutions, energy companies, and large corporates with a core focus on OTC derivatives markets. The company has a strong presence in Europe and is expanding in Asia-Pacific with plans for the US and Canada next year.

“On the financial side, we’re very strong in the debt asset class DAC area,” says Rennison, “because that’s where we’re born out of – Switzerland. We develop and support the product from Vienna, Austria. The only deviation we’ve had from our core focus is on money management reporting (MMSR). Some of our German, Austrian and Danish banks want us to do this reporting into their central banks. So, we’ve extended the model to become a one stop shop for their reporting within that data set.”

The company has grown organically reaching what Rennison describes as a “tipping point” in 2023, with the addition of global energy giants BP and Shell along with regional banks Helaba, Raiffeisen and Nykredit and banking groups like SDC and BEC in the Nordic region. The company doubled in size last year.

The company also white-labels its services through two major solution providers, Simcorp and Finastra. “Reg reporting is a low margin business relative to risk management or treasury management systems,” says Rennison, “so this makes economic sense to them and its good business for us and some clients never see deltaconX, it’s a pure white label service.”

Blended Skillsets

Compliance and regulatory data systems are complex, and their work often considered unglamorous. Yet the expectation is that their systems will function flawlessly at all times. Failure in controls not only escalates costs and stretches resources but also attracts the attention of regulators, leading to significantly higher operational costs and potential fines.

Rennison describes the typical scenario, “When the controls fail and things begin to unravel, your costs spiral, your resources are already stretched, and you appear on the radar of the regulator, and next you’re in the spotlight of the regulator. And once you’re in that spotlight, your costs become multiple times the costs to operate in compliance. And that’s before the fines kick-in.”’

Understanding the urgency of their clients’ needs in markets operating on T+1 and T+0 schedules, deltaconX ensures direct access to knowledgeable professionals without offshoring triage or using scripts. This approach guarantees that clients reach the right person immediately, facilitating swift issue resolution.

For the core team, deltaconX recruits individuals from banks and other reporting firms, leveraging their deep regulatory reporting experience. The team, characterized by empathy and deep domain knowledge, handles the interpretation of regulatory changes and their integration into deltaconX’s data schema. They also possess strong technology skills, enabling a blend of technical and regulatory expertise that becomes crucial in high-pressure environments.

This blended role, which integrates deep technical, compliance and regulatory skills, is unusual in the regulatory reporting industry. Rennison underscores this as a key differentiator – “The difference is one of those things that’s almost intangible until you need it, and then it becomes very tangible, and very addictive. Our ability to resolve issues swiftly in a T+1 environment through a single point of contact crystalises our value and makes our service incredibly sticky.”

Foundational Technology

Built from the outset on a cloud-native architecture, the deltaconX platform offers scalability, cost control, and continuous updates, which are essential for managing complex regulatory requirements.

“It’s not a lift-and-shift ported into Kubernetes on a hope and a prayer” says Rennison, “This gives us the elasticity to scale and control cost and be in a continuous release cycle. We do six planned releases a year.”

This cloud-native approach allows deltaconX to stay ahead of regulatory changes, whether initiated by regulators or required by Trade Repositories (TRs) or other agencies, without being constrained by clients’ operational cycles.

Data Lineage and Audit

deltaconX has decided to partner with a specialist data provider to handle the new unique product identifier (UPI) requirements. Rennison described the process to RegTech Insight.

“Layered within this wave of refits is the OTC reference data chain including the unique product identifier (UPI). We partnered with RegTech DataHub for this. They take data from Anna DSB and capture and other sources of public domain data. They’ve built a highly performant and referenceable repository of that data.”

Rennison continues, “We send an excerpt of the data on every trade, and they qualify the ISIN and the UPI and enrich where necessary. It’s the first time we we’ve had to move outside of the core data schema and partnering with a specialist solution provider made sense.”

deltaconX goal is to achieve near-full validation on schema and Regulatory Technology Standards (RTS) for supervisory authorities, ensuring the accuracy of all data elements, including counterparty data. deltaconX captures data at the field level and tracks changes, maintaining a fully auditable lineage for each trade. This includes reconciliation and records of every file returned by the TR.

Every record returned, including reconciliations, is identified, allowing clients to compare their submissions with those of their counterparties, even when different TRs are involved. The data remains permanently on the system, fully auditable, which is another advantage of being cloud-native, eliminating the need for facilities like Iron Mountain.

Staying Focused

DeltaconX’s concentration on regulatory transaction reporting over the past decade, with no diversification into other products, ensures focused expertise and uninterrupted development investment. As an owner-managed company with no external investment or debt, deltaconX maintains significant freedom to navigate financial challenges and align closely with customer needs.

The post Addressing the Global Refit with deltaconX appeared first on A-Team.

While these requirements are well-understood, they are hard to implement. But emerging AI-powered solutions are beginning to show efficiency gains in compliance use-cases, with the promise of making the regulatory data management and reporting process more efficient.

To explore the current landscape of regulatory reporting, identifying key challenges and practical solutions, A-Team is hosting its Best Practices in Regulatory Reporting webinar on July 16.

In this webinar, we’ll delve into next-generation best practices and innovative technologies, including domain trade data, AI, and machine learning. Our experts will discuss actionable insights on implementation, ensuring you walk away with practical strategies.

You’ll hear from Jehangir Abdulla, Head of Back Office Development at Schonfeld Strategic Advisors LLC.  

Jehangir will be joined by Unmesh Bhide, Director, Securitized Products Valuations at LSEG Data & Analytics and Joshua Beaton Head of Non-Financial Regulatory Reporting (NFRR) at Wells Fargo. 

Finally, Paul Rennison, Director, Corporate Strategy at deltaconX, will be on hand to share his 25 years of experience working for the likes of the London Stock Exchange, Trayport, FIS and now with the Swiss regulatory transaction reporting specialists, deltaconX. Speaking with RegTech Insight Rennison had this message for prospective attendees:

“I think being able to report and manage and track internally up to executive level has been really, really difficult. And I think if you’ve done this alone, i.e. you’ve not used a technology provider who has multiple other clients and experiences, the current low levels of transparency have created unease and uncertainty about whether you are complying. Regardless that this is a market-wide problem not being able to get shared validation of your experiences has made the whole experience far more damaging, I think it is important for people to know that what they are experiencing isn’t unique and it will get better but the experience has been worse for some and that is not a great outcome.”

Don’t miss out on this opportunity to hear about best practices for regulatory reporting and opportunities to unlock significant operational and business benefits.

Register now to discover:

• The current state of regulatory reporting
• The necessity of adopting new approaches
• The latest technologies, services, and solutions
• Practical guidance for seamless implementation
• The operational and business advantages of modernized regulatory reporting

The post Regulatory Reporting: Best Practices in 2024 and Beyond appeared first on A-Team.

Regulatory reporting functions are facing intense pressure as they navigate a labyrinth of requirements across multiple jurisdictions. The stakes have never been higher, with enforcement actions and penalties escalating for non-compliance. This landscape underscores the critical need for advanced technologies and solutions that not only streamline compliance processes but also enhance data accuracy, transparency, and operational efficiency.

LSEG Post Trade Regulatory Trade Reporting 

Winner, RegTech Insight: Best Regulatory Reporting Solution (EU 2024)

LSEG Post Trade’s Regulatory Reporting solutions enable companies to reduce their operational and regulatory risk and derive greater value from their reporting through a range of streamlined regulatory reporting, data and analytics solutions.

Trusted by firms in the UK and across Europe, LSEG Regulatory Reporting simplifies compliance with multiple global regulations, including EMIR and MiFID, and delivers significant operational efficiencies that allow firms to free up resources.

Delivered in a single, streamlined package, Regulatory Reporting’s core modules strengthen data accuracy and provide access to data and analytics that enable you to optimise your risk management.

LSEG Regulatory Reporting offers the flexibility to choose the combination of modules that works best for your business – so you not only benefit from the optimal end-to-end reporting experience but also meet your obligations for best practice systems and controls.

https://www.lseg.com/en/post-trade/regulatory-reporting

RegCentric

Winner, RegTech Insight: Best Regulatory Reporting Solution (APAC 2024).

RegCentric reimagines how regulators and the regulated industry exchange information, leveraging cutting-edge technology to create an efficient and safer financial system. The company’s services and solutions take a holistic approach to risk management, regulatory reporting, and data management.

Reg360 is the cloud-native RegCentric reporting platform that leverages its microservices architecture to deliver real-time analytics, automated data management, and comprehensive reporting governance and control.

Trusted by industry leaders, Reg360 supports firms with 500+ billion AUD Assets and 3+ million members and customers. Our mission is to simplify regulatory processes, reducing risks and costs for our clients.

https://www.regcentric.com/

AQ Metrics 

AQ Metrics offers a unified technology solution for risk, compliance and regulatory reporting. The technology offers a cloud-first infrastructure with global coverage across multiple jurisdictions and 24/7 operation.

The platform offers end-to-end reporting automation with guaranteed automatic data collection and aggregation, with in-built exposure and risk calculations delivering streamlined reporting to regulators.

AQMetrics’ built-in integrations with leading fund administrators, financial institutions, and data providers simplify the regulatory filing process, making regulatory reporting smarter and faster.

Enhance your reporting process with both automated and single-click regulatory XML generation. AQMetrics’ audited workflow supports reporting at scale, doing the heavy lifting for you.

https://aqmetrics.com/solutions/regulatory-reporting/

Clearwater Analytics 

Clearwater Analytics supports any accounting basis including IFRS, GAAP, Statutory, Tax, and others. The system has 15+ audited accounting bases available and can support Nth accounting bases. With an intuitive and user-friendly platform, users can easily customise disclosure reports and other standard balance sheets, income statements, and roll-forward reports.

Clearwater has developed an effective approach to help clients seamlessly migrate to the IFRS 9 accounting standard. Clearwater’s clients can work with their dedicated client services team to develop a plan for comparatives and initial classification and measurements, the two steps to adopting IFRS 9. Clearwater’s solution is equipped with the data management and reporting tools needed to adopt IFRS 9 successfully and offers the flexibility to choose options that are right for your firm.

Clearwater Analytics allows its users to receive automatically generated GASB disclosures. Clearwater creates GASB 31, 40, and 72 reports at the click of a mouse. With an intuitive and user-friendly platform, users can easily customise disclosure reports and other standard balance sheets, income statements, and roll-forward reports.

https://clearwateranalytics.com/

CSS, a Confluence company 

Compliance Solutions Strategies (CSS) from Confluence solves global regulatory challenges with an end-to-end, integrated approach to technology and services that deliver compliance-as-a-service. CSS combines a holistic RegTech platform with regulatory expertise and managed services to cover five critical areas with a single platform: fund reporting, investment monitoring, compliance management, transaction reporting and regulatory book of record.

Confluence Innovation Lab applies large language models (LLM) to solve complex reconciliation challenges, such as the SEC’s Tailored Shareholder Reports (TSR). The new tool, Confluence Unity Rex, mines and pinpoints discrepancies in language and numeric information between financial reports and the TSR, delivering significant efficiency and cost savings in the reconciliation process.

Built on experiences from EMIR and MiFID II, CSS’s multi-regulatory platform seamlessly integrates with source systems, giving financial firms the flexibility to adapt to rapidly changing regulations and requirements from ESMA, Trade Repositories, ARMs, EUNCAs and other global regulators like ASIC, MAS and HKMA.

https://cssregtech.com/

Iris Business Services 

Iris has an extensive record of helping financial firms comply with the XBRL regulatory reporting standard beginning in 2005.

IRIS CARBON®, a SaaS product, was introduced in the US and Europe in 2016 and immediately gained the distinction of being a solution that simplified XBRL conversion and improved reporting quality. The IRIS CARBON® platform has been expanded to provide a disclosure management module that helps companies author compliance and disclosure statements. The solution also facilitates ESG reporting.

IRIS CARBON® offers an XBRL/iXBRL reporting solution that enables companies to submit reports to various regulators globally. These include but are not limited to the US SEC, US FERC, European Union regulatory bodies, UK FCA and HMRC, Irish Revenue, and South Africa’s CIPC.

IRIS CARBON® Disclosure Management solution simplifies your financial and non-financial report creation and authoring procedures by providing you with the most user-friendly and collaborative workflows and processes. Financial and non-financial reporting teams can now access and work on disclosure documents on a single platform.

https://www.iriscarbon.com/

Kaizen

Kaizen ReportShield suite of controls combines regulatory expertise and advanced technology to act as a shield against regulatory reporting issues, helping firms to achieve accurate, complete and timely reporting.

Take control of regulatory reporting data quality with Accuracy Testing. Trusted by hundreds of firms worldwide, this automated control suite applies thousands of tests on 100% of reportable trades down to the field level. Available via an easy-to-use dashboard, specialist support is available to ensure clients’ reporting meets the latest standards and best practices.

Regulatory reconciliations are complex and can create additional stress on already over-stretched compliance teams. Kaizen’s end-to-end Advanced Regulatory Reconciliation managed service provides an independent assessment of the completeness of your regulatory reporting to identify under and over-reporting.

Regulatory reporting errors are often a consequence of weak or incomplete control frameworks within investment firms. Our comprehensive governance framework is designed by our regulatory reporting specialists to promote the completeness, accuracy and timeliness of your reporting.

https://www.kaizenreporting.com/

MAP Fintech 

MAP FinTech is a leading award-winning global regulatory technology provider for the financial services industry. It specialises in reporting solutions arising from the requirements of a number of complex and challenging international regulations, such as EMIR, MiFID II/MiFIR, ASIC, MAS, SFTR, FATCA, DAC6, and CRS. MAP FinTech also provides innovative and comprehensive solutions for Best Execution Monitoring, RTS 27/28 reporting, KYC & AML Transaction Monitoring, Trade Surveillance (Market Abuse), and eKYC (Screening, eIDV, Document Authentication).<

MAP FinTech is one of the First providers in Europe to report under the European Market Infrastructure Regulation (EMIR), with billions of transactions successfully reported thus far since February 2014.

The company currently serving over 200 B2B global clients and has been recognised for multiple awards including Best RegTech Reporting Solution at the 2022 Ultimate FinTech Awards and at the RegTech Insight APAC Awards 2022 for our FATCA Reporting solution.

FinTech’s Polaris Reporting Hub manages the complexity of multiple reporting regimes, enhancing and routing data to the competent international mechanisms and/or authorities in the required format.

https://mapfintech.com/

Regnology 

Regnology Reporting Hub digitally transforms regulatory reporting with a holistic view of the client’s entire process enabling efficient management of the client’s operations on a single platform.

The reporting process is automated through a streamlined reporting workflow from report creation to submission. The process passes through 10,000+ validation rules across different jurisdictions and reporting frameworks, with variance analysis and time series analysis that collectively provide smooth communication to the regulator.

Report and team-level views (Kanban) provide a clear, at-a-glance overview of the state of your reporting cycle.

Regnology microservices architecture allows regulatory changes to be implemented quickly and easily. It also enables you to personalise your solution, effectively leverage cloud infrastructure benefits, and embrace digital regulatory reporting, drastically reducing overall compliance costs.

https://www.regnology.net/en/

Regnosys 

Regnosis is a provider of regulatory reporting solutions, known for integrating advanced technologies to streamline compliance and reporting processes.

The company focuses on reducing the complexity and cost associated with regulatory reporting through a low-code platform that leverages two key frameworks: Digital Regulatory Reporting (DRR) and the Common Domain Model (CDM1) from the International Swaps Dealers Association (ISDA).

This enables scalable regulatory change implementations by using a standardised representation of required reportable data and turning trade reporting regulations into unambiguous, human-readable, machine-executable, open-access code for any trade reporting jurisdiction. DRR can be used as core internal reporting logic or to validate an internal (or external) implementation.

https://regnosys.com/solutions/regulatory-reporting/

S&P Global Market Intelligence Cappitech 

Compliance Reporting in a Single Platform

Full reporting for EMIR, MiFID II, SFTR, ASIC, MAS, CFTC and other regimes as well as Best Execution monitoring & Reconciliation – all from one convenient platform.

End-to-end secured automation via an advanced data integration platform provides full-service data mapping, data enrichment, report formatting, trade repository, and approved reporting mechanism submissions and back reporting.

Capturing trade data in any format and normalising it into a single data structure.

A professional services team supports every stage of the onboarding process, which typically takes 6-8 weeks from kick-off to reporting. The same team will provide ongoing support after going live.

The platform is designed with a flexible architecture to handle large amounts of data, complying with multi-jurisdiction transaction reporting obligations, extracting in-depth business insights from your own compliance data as well as using other publicly available data sources.

S&P Global Market Intelligence Cappitech

Traction Fintech 

Traction provides financial and regulatory technology services across Europe, North America and the Asia Pacific. Established in Australia at the beginning of 2015 Traction quickly expanded to the European markets in 2016. With offices in London, Sydney, Cyprus, and Singapore, Traction supports financial firms, brokers, investment managers, banks, and electricity suppliers in complying with their reporting obligations processing millions of reportable transactions each day.

Traction is a delegated service provider and acts as an intermediary between regulated financial firms and licensed Trade Repositories (TR) and/or Approved Reporting Mechanisms (ARM).

The fundamental benefits of using a delegated reporting provider include: relieving the burden on human and internal resources assigned to trade reporting, understanding detailed trade reporting obligations, ensuring the reporting requirements and industry standards are met and staying informed and up to date with any regulatory change.

https://tractionfintech.com/about-traction/

Vermeg International 

Vermeg is a specialised software house covering Banking, Capital Markets, Insurance Markets and Digital Transformation services.

In addition to offering standard software solutions, VERMEG provides tailor-made solutions based on proprietary tools, experience, and business expertise. Its strategy of providing effective and evolving digital solutions is executed with multicultural, social, and environmental considerations and a focus on talent development.

UK/EU regulatory reporting:

• Bank of England (BoE) / Prudential Regulatory Authority (PRA) calculations and reports
• Financial Conduct Authority (FCA) returns
• European Banking Authority Reporting

US and Canadian reporting:

• Federal Reserve (FED) and Federal Deposit Insurance Corporation (FDIC) reports
• Regulatory Capital & Liquidity, Concentration Monitoring
• US Treasury & Bureau of Economic Analysis reports
• Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC
• Canadian Office of the Superintendent of Financial Institutions (OSFI) reports
• Bank of Canada reports
• Cayman Island Monetary Authority reports

Asia Pacific Region includes:

• Monetary Authority Singapore reports
• Hong Kong Monetary Authority reports
• Australian Prudential Regulation Authority (APRA) reports
• Reserve Bank India reporting

https://www.vermeg.com/banking-challenge-regulatory-reporting/

Wolters Kluwer

OneSumX for regulatory reporting comprises software and services as a regulatory reporting solution comprising four core capabilities.

Regulatory intelligence and change management are offered as a service with a robust risk engine for regulatory and business risks with embedded business analytics to meet all risk reporting requirements

State-of-the-art technology offers multiple deployment options for our Regulatory Reporting solution. On-premises or SaaS architecture are available and can be integrated with OneSumX for Risk Management.

Our enterprise software-as-as-service provides the secure hosting and support you need to navigate ever-changing regulatory requirements.

OneSumX is engineered to be the regulatory reporting platform for all global jurisdictions.

Wolters Kluwer Reg Reporting

So, there you have it, 14 to watch out for in regulatory reporting developments this year. If you feel your firm should be included in this or any of the other RegTech Insight awards categories, let us know on the form below.

The post Regulatory Reporting – 14 to Watch in 2024 – (EU/APAC) appeared first on A-Team.

RegTech Insight

Could you share some background on these two purchases and how the pieces will fit together?

Richmond

We agreed a strategic investment from HG in March 2024 – see Cube and Hg Unite – and that was very purposeful for us in the market. We think there’s a significant need in the RegTech sector for companies to have scale, which is needed to deliver the level of capability – and infrastructure – that will ensure data quality is paramount. The comprehensiveness and accuracy of what we do is critical for us and for our customers. That means you need to have lots of different resources that co-exist alongside the technology, AI, and infrastructure to deliver high-quality solutions that ‘don’t miss.’ We deliver solutions that our customers can trust to meet their regulatory requirements.

RegTech Insight

So, it’s really about achieving scale?

Richmond

That’s really what it comes down to. We’ve enjoyed strong growth as a leading tech platform in regulatory intelligence, and we’ve signed many amazing customers globally. We’ve done very well as a firm already, but that’s just the start of Cube’s journey. We see a market opportunity aligned with our strategy to integrate highly adjacent firms that complement the Cube platform and service. We focus on financial services, banking, asset management, investment management, payments infrastructure, and insurance. These areas are all highly synergistic – both in terms of customer focus, as well as adjacent industries.

Reg-Room and the global regulatory intelligence businesses at Thomson Reuters have fantastic pools of subject matter experts (SMEs), regulatory experts, legal experts, researchers, editors, and journalists who have all been creating huge amounts of content over the last 20 years. That expertise is invaluable for augmenting and improving our solutions, which means we can provide more human-curated and human-in-the-loop services. We can now leverage a huge amount of data and human expertise in regulatory analysis, impact assessments, and summarisations.

This purposeful targeting of the acquisitions we’ve done in quick succession gives us absolute scale and synergy with our product proposition. The new combination brings a wealth of data learning, rich expertise, and accelerated R&D and innovation. The data is crucial, providing highly curated, structured, high-quality information for learning and model training.

This is a powerful combination and will allow to innovate and serve a broader set of global customers. We’ll be able to go faster and deliver truly transformative work. With a thousand customers globally, we now have a critical mass to determine what to solve for tomorrow. That’s not to take away what the team has done until today in terms of delivering a strong platform, but we aim to represent the industry more effectively in the future given our larger customer base. We believe we sit in an unparalleled position in the market.

This might look like everything’s happened very fast at Cube and, yes, we’ve been incredibly busy in the last few weeks, but this is very much part of a long-term strategy. We didn’t just come up with a plan overnight. In terms of the long-term goal, we will have all our customers on the Cube platform.

These acquisitions bring complementary technology and product capabilities. We’re integrating the best features into the Cube platform, focusing on unification. It’s all about one Cube, not multiple products in the market.

RegTech Insight

AI has been part of the Cube story from the beginning. Can you discuss where you see frontier AI technologies – generative AI and LLMs – in the Cube roadmap?

Richmond

We use AI extensively across everything we do, from computer vision and data structuring to NLP for text classification and extraction. We also use machine learning for data capture and in-product applications, improving based on customer interactions. In the world of GenAI, we’ve developed our proprietary language model and use LLMs for summarising regulatory obligations, understanding imperative statements, and identifying key topics in regulations.

We’ve built a proprietary language model for regulatory analysis, which we use extensively. We’re pioneering the delivery of AI that customers can use in many ways. We know that more advanced data learning and generative models will further augment and automate compliance processes, which achieves better compliance and also transforms internal efficiencies.

RegTech Insight

Having effectively digitised the path from Regulation to a set of obligations that can be automatically checked against Internal Policy and Procedure, the next step would seem to be connecting this to production systems and measuring compliance as processes are being executed. How are customers leveraging Cube interoperability with internal systems and controls?

Richmond

This involves automating the mapping of customer obligations to policies, procedures, and controls. We aim to provide granular, risk-based insights and full traceability for customers. The next stage is measuring adherence to control requirements related to obligations and creating industry standards and benchmarks. We can present this data in a way that connects to internal processes, helping customers implement and measure compliance effectively.

We have an API that our customers use. We have solutions today where customers will call our API to be able to work out what the regs are in a customer onboarding process or for the mortgage account opening process. So, we see regs at the infrastructure level as rules that can be consumed by machines. “Decision by Machine” is a key part of our roadmap, and that’s part of how Cube is already being used today.

RegTech Insight

FINRA and FCA both make their regulations machine-readable to facilitate regulatory intelligence, but regulatory harmonisation still feels a long way off. How are you finding working with regulators in other geographies?

Richmond

There are two observations to make here. First, the regulatory environment is very pro-quality solutions and technology that can help improve compliance, so we get a lot of positive engagement, good support, and collaboration from the regulators.

But the second challenge always remains: there isn’t the same join-up and the same way in which regulations are produced, classified, and taxonomised. And alongside this, there are differences of interpretation across jurisdictions.

t’s the role of Cube to enable the customer to be fully informed of what they need to know about, we help to remove that cross-jurisdictional cross-regulator complexity.

This means customers can make the right decision but do it in a fully informed way. Then, work with regulators as effectively as possible, possibly via APIs. But really, it’s about good dialogue and good collaboration.

RegTech Insight

How does Cube handle translation with regulations published in multiple languages?

Richmond

Language support is crucial, given the variety of languages regulations are published in. We use multiple translation engines and our proprietary models to ensure high-quality translations. About 7,000 languages are spoken worldwide, but fortunately, only about 70 languages are used for publishing regulations. We have built models around each of these 70 languages to ensure accurate translations. Without consistency and accuracy in translation, everything else falls apart.

We use different engines that are best at handling the core languages, and we overlay our proprietary capabilities to ensure high-quality translation. This process includes our team of 25 regulatory linguists who help train these models and ensure they can detect and interpret regulatory language nuances. Accurate translation is fundamental because it drives the classification of regulations and their applicability, making consistency and accuracy critical for our solutions.

The post Cube Scales Globally with Two Strategic Acquisitions appeared first on A-Team.

Enter the Corporate Sustainability Reporting Directive (CSRD), the ambitious regulatory framework aimed at standardising sustainability reporting across the EU. As firms scramble to align with these new requirements that become mandatory for the first tranche of covered firms in 2025, the directive promises to reshape the landscape of corporate sustainability, holding companies to a higher standard of environmental and social responsibility.

The Securities and Exchange Commission (SEC) has attempted to implement its own set of guidelines. However, these efforts continue to be entangled in a web of litigation and partisan debate. As firms navigate this turbulent environment, the contrast with Europe’s more pragmatic approach becomes apparent.

In this article, we will delve into the CSRD implications from the contexts of governance, workflow, data management, and enabling technology and explore the challenges that arise in each area.

The Corporate Sustainability Reporting Directive (CSRD)

The CSRD mandates that companies report in accordance with the European Sustainability Reporting Standards (ESRS). These standards encompass a broad range of sustainability topics, structured into two general standards and ten topical standards covering ESG aspects. The general standards (ESRS 1 and ESRS 2) provide guidelines on the overall framework for sustainability reporting and general disclosures that all companies must make. The topical standards delve into specific areas such as climate change, pollution, water and marine resources, biodiversity, and social matters like labour practices and human rights.

Companies must conduct a double materiality assessment to identify which sustainability issues are material from both an impact perspective (how the company affects the environment and society) and a financial perspective (how sustainability issues affect the company’s financial performance). This comprehensive approach ensures that all significant sustainability impacts, risks, and opportunities are reported.

The European Financial Reporting Advisory Group (EFRAG) provides comprehensive guidance on implementing the double materiality approach required under the CSRD. Double materiality encompasses both financial materiality (how sustainability issues affect the company’s financial performance) and impact materiality (how the company’s operations impact the environment and society). EFRAG has been tasked with developing the digital XBRL taxonomy for the ESRS, which will facilitate the tagging of sustainability reports in a machine-readable format.

EFRAG’s implementation guidance (IG) outlines several critical steps and considerations for firms to measure materiality effectively:

Understanding Context and Stakeholders

Firms are advised to start by thoroughly understanding their operational context, including business processes, business relationships, and affected stakeholders. This step involves mapping the company’s value chain to identify relevant sustainability matters and potential impacts, risks, and opportunities (IROs).

Criteria for Materiality Assessment

EFRAG recommends using objective criteria to assess the materiality of identified impacts. For impact materiality, companies should evaluate the severity of impacts based on their scale, scope, and irremediable character, along with the likelihood of potential impacts. For financial materiality, the focus is on the magnitude and likelihood of financial effects, including performance, financial position, cash flows, and access to capital.

Stakeholder Engagement

Engaging stakeholders is crucial for substantiating the materiality assessment. This involves consulting affected stakeholders (e.g., employees, communities) and users of sustainability reports (e.g., investors) to gather diverse perspectives and ensure the assessment reflects the concerns and priorities of all relevant parties.

Key Challenges for In-Scope Firms

ESG terminology introduces many new terms and definitions, some of which are not readily represented digitally, creating new data requirements and sourcing challenges.

Existing GRC teams will need to absorb new roles and responsibilities, or new roles will need to be created and positions filled with the right skill sets. The terms of reference, authorities and accountabilities for these roles must be clearly defined.

Integrating materiality assessments into corporate governance frameworks requires that boards and senior management be actively involved in overseeing the materiality assessment process, ensuring that sustainability considerations are embedded in strategic decision-making. Regular updates and reviews of the materiality assessment process are essential to maintain its relevance and effectiveness

The materiality assessment process must be integrated into existing business processes, particularly risk management, strategy development, and reporting. This integration ensures that sustainability risks and opportunities are considered alongside traditional financial metrics.

Companies will need to collect, process, and analyse large volumes of sustainability data from many sources. including internal operations and external stakeholders. One of the biggest challenges will be identifying, collecting and preparing these new data sources. Scope 3 emissions data is particularly complex in this regard.

Scope 3 emissions encompass the indirect greenhouse gas (GHG) emissions that occur throughout a company’s value chain, both upstream and downstream. These include emissions from suppliers, business travel, employee commuting, waste disposal, and the use of sold products.

Unlike Scope 1 (direct emissions from owned or controlled sources) and Scope 2 (indirect emissions from purchased energy), Scope 3 emissions are often the most challenging to measure and manage due to their diffuse nature and dependence on third-party data. Despite these challenges, addressing Scope 3 emissions is crucial as they frequently represent the largest portion of a company’s total carbon footprint.

Scope 3 emissions include those produced by suppliers (upstream) and by customers using the company’s products or services (downstream). Scope 3 is critical because it often represents the largest portion of a company’s total emissions, significantly affecting the company’s carbon footprint.

Effective management and reduction of Scope 3 emissions are essential for companies aiming to achieve net-zero targets and contribute to global climate goals. Ideally, carbon footprints would be available at individual workload levels in near real-time. But that’s a long way off, and several things need to happen before it becomes feasible. Principal among these is the lack of scope 3 data granularity currently available from cloud service providers.

Data centre power consumption is a major contributor to the carbon footprint of capital markets firms. The rapid uptake of Generative AI(GenAI) and other frontier AI technologies is projected to disproportionately increase data centre power consumption. This will force firms to rethink their data centre and hybrid multi-cloud strategies.

Technology will be a critical enabler for a successful CSRD implementation as it is for all GRC functions. GenAI and LLM’s ability to process vast quantities of unstructured sustainability data and automatically match compliance obligations with impacts, risks and opportunities (IROs) for double materiality assessments will significantly boost efficiency and productivity for sustainability compliance.

The alignment between CSRD and the IFRS Sustainability Disclosure Standards, including the integration of Scope 3 emissions, reflects a global move towards more transparent and standardised sustainability reporting. The International Sustainability Standards Board (ISSB) has also included Scope 3 emissions in its climate-related disclosure requirements, emphasising the importance of these emissions in understanding a company’s overall environmental impact and climate resilience.

As companies navigate the CSRD and the data integration challenges of Scope 3 emissions, they are presented with an opportunity to lead in sustainability and transparency. By embracing the challenges of robust data management, advanced technology integration, and comprehensive governance frameworks, businesses can not only achieve compliance but also drive significant environmental and social impact.

The post The CSRD – Governance, Workflow, Data and Technology Impacts for 2024 appeared first on A-Team.

Duco’s transaction reporting solution was selected as a RegTech Insight award winner by A-Team Group’s independent, expert advisory board in collaboration with its editorial team.

Steve Walsh, Director, Product and Solutions at Duco, explains why and how the company’s award-winning transaction reporting solution was developed and the benefits it can deliver.

A-Team: Please tell us about Duco’s transaction reporting business and the types of capital markets clients the company works with

Steve: Duco has been helping global and regional banks, asset managers, hedge funds and broker dealers with their regulatory challenges for nearly 10 years. Our clients have faced a tremendous amount of change recently, with global regulators updating reporting requirements. Duco has responded by developing new capabilities to help clients keep up with the increasing demands on data quality and controls.

A-Team: What challenges are your clients facing in this space at the moment?

Steve: Regulatory rewrites (CFTC, MAS, ASIC) and refits (EMIR) are introducing significant data complexity, new formats (e.g. ISO XML) and new data fields, leaving firms to manage competing requirements. Regulators are focusing even more on the accuracy and completeness of data, as well as over- and under-reporting. So, you’ve got to get more data, from systems that are getting more complex, and you’ve got to do it under tighter deadlines in many cases. Add in the fact that transaction reporting has historically relied upon data and systems that weren’t built to do that. All these factors can make delivering accurate and timely data difficult. In fact, some industry tests have shown that 57% of all trades have at least one error when they are reported to the trading repository (TR).

The key challenges are ensuring that:

• Firms are reporting the right transactions
• The data is complete and meets requirements
• Mismatches between reporting and upstream data processes are corrected quickly to ensure they are not repeated.

Regulators are looking for open dialogues with national competent authorities whenever issues arise as well. All of this means firms must have a good handle on their data, their processes, and the tools they use to ensure compliance – more so than ever before.

A-Team: How does Duco help customers address these challenges?

Steve: We’ve combined the knowledge we’ve gained helping clients effectively manage regulatory change with our extensive reconciliation experience to create our EMIR Refit solution, preconfigured to ISO XML format and maintained by Duco. Clients no longer need to run large, expensive projects to manage regulatory reconciliations. They can be up and running in a matter of days with our unique, out-of-the-box solution.

The solution can be used for upstream data or as a post-reporting control to demonstrate a focus on reporting accuracy. It leverages Duco’s market-leading reconciliation platform with no-code Natural Rule Language, automated exception management workflows and best-in-class match rates, giving customers an easy-to-use solution for complex reporting. In addition to auth.30 trade and margin reports, users can incorporate auth.091 DTCC pairing/matching reports to confirm match transaction status in one reconciliation.

Duco has also partnered with regulatory experts Quorsus, part of CapGemini, to deliver a TR eligibility validator, which provides an independent validation of internal eligibility rules against existing ESMA eligibility criteria. We believe it’s the only solution on the market that shows clients not just whether or not a trade is eligible, but which criteria are causing issues and why, providing actionable insight in a matter of minutes.

A-Team: Please tell us why and how Duco developed its award-winning transaction reporting solution

Steve: Through numerous discovery sessions, we uncovered that clients needed post-reporting controls to ensure their reporting was accurate and complete, and that any errors that do occur were addressed upstream to prevent them repeating. Our reconciliation capabilities were a natural fit.

We developed a preconfigured template mapped to the ISO XML reporting format for EMIR to ensure that all fields were represented correctly and that clients could easily map their data – both from the trade repository as well as internal systems – and complete now mandatory reconciliations on reported data.  In addition, we recognised that eligibility – i.e. ‘did I report the correct transactions?’ – was going to be a huge issue.  So we partnered with regulatory experts Quorsus to develop eligibility checks.  What was vital was that clients could see the calls made and link them back to rules.

Breaks are managed through Duco’s exception management workflow, with results showing at a field level, and for each field users can see which rule is being applied and why it is being interpreted as it is. Other tools take a more black box approach, leaving clients to undertake complex investigations into why breaks are happening.

A-Team: What are the client benefits of using this award-winning solution?

Steve: It’s really about transparency and control. At the end of the day, firms need to be able to show regulators that they are taking robust steps to ensure data quality, whether they’re reporting their own data or delegating reporting to a third party. With Duco, everything is field level, and everything is self-documented, so you can see exactly what actions have been taken on data. And it’s about ensuring that change doesn’t throw your data out of whack.

For example, Duco’s eligibility validator can be used as a ‘golden source’ for eligibility rules. Firms can then check results against their internal rules and identify issues for investigations. If data or system changes happen upstream, you can easily see whether that’s impacting reconciliation.

Finally, the data and processes are in the hands of the business owners who know it. Duco’s Natural Rule Language, no-code approach and easy-to-use platform means changes don’t have to be routed through the IT backlog. Business owners can make the changes they need with little to no technical skill required. And the self-documentation I mentioned before means IT can sleep easy knowing they have full visibility into any changes made.

A-Team: Please run through a short case study of Duco’s transaction reporting solution

Steve: A customer preparing for the reporting changes to EMIR required a robust assurance package for trade reporting controls. They previously obtained the data required to report under EMIR’s expanded 203 fields from between eight and 12 internal systems, using manual reconciliations to verify the accuracy of an extremely large data set. This required the maintenance of complex macros, a large team to run and manage the reconciliations – and more resources needed to manage other incoming regulatory changes, and email-based exception management workflow. They lacked the capability to convert incoming ISO/XML formats and the ability to identify and remediate issues requiring escalation to their national competent authority.

Duco has removed these challenges, providing a preconfigured solution integrated seamlessly by our expert professional services team, for complete control assurance and to meet the customer’s core objectives. These include a way to easily transform and normalise internal system data to match the required ISO XML format, a two-sided reconciliation between the transformed internal files and those received from the trade repository, and exception management tools that streamline the process of getting remediation in place more quickly.

Duco’s preconfigured solution delivered all of these requirements. Data preparation and reconciliation in the platform is straightforward and can be managed by business owners without the help of IT, and automated exception management workflows enable centralised and transparent remediation and resolution of key issues. As a result, the customer has replaced manual reconciliations, removed the need for a slow and expensive IT change management procedure, and has confidence in their reporting data.

A-Team: How will you develop the solution over the next year?

Steve: Duco is developing similar solutions for additional regimes, such as ASIC and MAS, whose rewrites are going live in October. In addition, we’ll be expanding our eligibility and data validation capabilities to help clients manage a wide range of global regulatory regimes.

A-Team: Finally, what does winning A-Team Group’s 2024 RegTech Insight Europe award for Best Transaction Reporting Solution mean to Duco?

Steve: Recognition of our best-in-class solutions is key to giving customers understanding of our capabilities and confidence in their ability to solve key data automation challenges in the regulatory space. We’re incredibly proud of this award and know that it will bring an additional layer of trust for firms who may not have worked with us before but are looking to stay compliant with the data quality demands of an evolving regulatory landscape.

The post Duco Wins Award for Best Transaction Reporting Solution in A-Team Group RegTech Insight Awards Europe 2024 appeared first on A-Team.