Securities Finance Times feature article

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Securities Finance Times spoke with Val Wotton, DTCC Managing Director, Product Development and Strategy for Repository and Derivatives Services, to learn more about how DTCC helps companies meet their trade reporting obligations. , especially since many companies now need a new transaction repository for SFTR. report

It has been over a year since the first wave of Securities Financing Transactions (SFTR) regulations came into effect and today the trade reporting landscape continues to evolve at a rapid pace. In August, UnaVista announced that it would end its trade repository (TR) services for SFTR, effective January 31, 2022.

It’s no secret that the process of porting TR data to a new service provider can be difficult. DTCC, which operates the leading trade repositories for securities financing and derivative transactions, works closely with UnaVista to ensure a smooth transition for companies that choose to leverage DTCC’s European or UK trade repository for their needs. SFTR reporting.

“We’re no stranger to helping businesses navigate seamlessly between another TR and DTCC’s Global Trade Repository (GTR) service,” Wotton shares. “Almost a year ago, many companies switched to GTR when CME decommissioned its European and Australian trade repositories. I remember a client who personally thanked me for the ease of the transition for his business. It’s testimonials like this that make me proud to be a part of the DTCC community, where we put customer satisfaction at the top of our list of priorities.

Easy integration and comprehensive customer service

“As the trade reporting landscape continues to change and evolve, we are committed to continually improving, innovating and reinventing the best way to serve our clients by helping them comply with the various regulations that continue to challenge corporate operations. declaring, ”says Wotton.

DTCC’s award-winning SFTR service processes approximately 85 percent of all SFTR trade report volumes in the UK and Europe, processing over 115 million messages per month for over 800 customers. “I think one of the main reasons we have a dominant market share is our streamlined onboarding program and robust customer service. They are essential contributors to a superior customer experience, ”he continues.

The SFTR service is built on the GTR infrastructure, the industry’s premier trading reporting solution for over-the-counter and exchange-traded derivatives, serving approximately 80 percent of the global market. GTR operates locally registered or licensed trade repositories around the world, supporting reporting regimes in Australia, Europe, Hong Kong, Switzerland, Japan, Canada, Singapore, UK and United States.

Respond to needs before and after reporting

Over the past decade, financial companies have experienced waves of new and revised regulations regarding transaction reporting. And more changes will be made over the next few years, as nearly all jurisdictional rules for reporting derivative transactions will be rewritten to adopt industry-recommended standards.

Launched in early 2020 and extended in December 2020 with DTCC’s acquisition of the Compliance Management Reporting System (CMRS) platform from Publicis Sapient, DTCC Report Hub enables companies to manage their global derivatives, the Markets in Instruments Directive. financial II (MiFID II) and securities. Financing Transactions Regulations (SFTR) pre and post trade reporting requirements with a single vendor solution.

Compliance challenges

Among the regulations resulting from the 2008 financial crisis were reporting mandates for derivative transactions. The jurisdictions deployed their respective rules at different times and without close coordination. The result: numerous differences in reporting formats, business data elements and other parameters, which now trigger a new round of rule revisions designed to increase standardization across jurisdictions.

“This post-crisis global regulatory push and the continued failure to harmonize rules across reporting regimes have necessitated continual changes in business technology platforms,” says Wotton. “After a decade of patching to accommodate one new rule or update after update, the transaction processing and reporting infrastructure in most organizations today is redundant and inefficient.”

For companies that have developed their own pre-report and post-report capabilities, upcoming rewrites of derivatives rules – which will include the adoption of Common Data Elements (CDEs) and unique product identifiers. (UPI) for the statement – will stimulate even more updates to their infrastructure and further burden the capabilities and functionality already in demand.

Changing regulatory requirements will also require continuous improvements to businesses’ data management and messaging processes. For example, if, as expected, regulators adopt the ISO 20022 message system for CDE derivatives, business data will need to be standardized to meet this new standard – a tedious job that many companies will likely need help with. .

“The pressure on internal staff, processes and platforms caused by constantly changing regulations has led some companies to turn to one or more third-party solution providers to provide separate pre- and post-report functionality. Describes Wotton. “But the result can be a patchwork of solutions that are not integrated with each other and require multiple connections,” he continues.

Additionally, using solutions from different vendors can deprive businesses of the comprehensive, cross-jurisdictional regulatory coverage they need to manage pre-and post-reporting activities for all reporting regimes, each with different rules. Without a unified solution, businesses could face increased compliance risks and costs.

Unified solution for pre and post report workflows

Given the challenges ahead in transaction reporting – including the ongoing and specific changes to the derivative mandate regime, the complexity of SFTR reporting, and the sheer difficulty of managing transaction reporting across multiple asset classes and jurisdictions – A unified, single-vendor suite of services like DTCC Report Hub can help businesses mitigate risk, improve operational efficiency, and lower costs associated with regulatory reporting compliance.

For companies that have developed solutions in-house, the move to DTCC Report Hub frees up considerable staff time and internal resources. DTCC Report Hub’s single-vendor model provides the consistent and streamlined functionality that is typically lacking when businesses use multiple vendors.

Wotton explains that “The DTCC Report Hub platform is a game-changer for pre- and post-trade reporting services. By providing a unified, single-source pre- and post-declaration platform, businesses can consolidate reporting activities for multiple jurisdictions – US, UK, Europe, Canada, Israel, Singapore, Australia and Hong Kong – and prepare for upcoming rule additions and changes. ”This scope of coverage can help companies maximize operational efficiency and mitigate compliance risks, reduce costs and free up staff to focus on other priorities.

With its comprehensive suite of pre-report services, DTCC Report Hub streamlines the complex workflows required to prepare business data for submission to TRs or MRAs. Beginning with data standardization and transformation – including to adapt to the ISO 20022 messaging scheme – this suite provides data enrichment, jurisdictional eligibility analysis, a customizable rules engine, and management and reprocessing. advanced exceptions.

Closing the report loop

In addition to interfacing with TRs and ARMs to facilitate business submissions, DTCC Report Hub also offers post-report functionality. Its reconciliation tool applies controls for completeness and accuracy of reporting on TR end-of-day reports against a client’s internal systems. DTCC Report Hub can also provide in-depth data analysis to help companies better manage the completeness, accuracy and timeliness of reports.

Even with a solution like DTCC Report Hub, companies will still need to keep pace with global regulatory production by having up-to-date reporting, controls, systems and governance processes. Companies that have repeatedly changed their infrastructure in response to new and revised mandates may need a top-down overhaul if they are to manage regulatory reporting risk cost-effectively. The experts at DTCC Consulting Services can help companies analyze their infrastructure performance and data quality and help them assess whether certain improvements or redesigns are warranted.


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