Trade & Transaction – The importance of holistic reporting

AxiomSL | Inside View - Trade and Transaction Reporting

February 21, 2017 – By Gaurav Chandra, Product Manager, AxiomSL EMEA

Given the increasing level of regulatory reporting requirements that firms will be subjected to in 2017 -many of which still remain in flux – institutions may feel driven to build in-house systems. However, looking at the bigger picture, it appears likely that the effective maintenance of these siloed systems would be unmanageable. The right combination of building blocks can help financial institutions to keep up with today’s very fluid regulatory requirements, mitigate risk, reduce costs and gain a competitive advantage.

As the industry prepares for the go-live date of MiFID II early next year, it is reported by the Financial Times that firms will spend a total of more than $2 billion during 2017. Although, the pace at which institutions are preparing is extremely inconsistent, with some already implementing changes while others are still in the early stages of planning. MiFID II, along with other regulations affecting the region, such as EMIR, SFTR etc., mean that it is becoming progressively difficult for institutions to keep on top of the ever-evolving rules.

In turn, this means that institutions are expected to increase their spending on data management, which is a direct reflection of the powerful supply and demand dynamic. On the supply side, it is the exponentially increasing data need, due to process automation, digitisation and the like – whereas the demand side is strengthened by the ever more spanning customer types and regulations.

On the plus side, much of the data is in fact common to multiple regulations, for instance, EMIR and Dodd-Frank. Institutions can continue to spend time and money updating in-house technology solutions or take advantage of third-party solutions that accommodate for industry-wide upgrades without the need for further architectural changes, as will be the case with EMIR phase II which comes in to effect on November 1st of this year.

Solutions, like that of AxiomSL, are prompting rapidly shifting gears in the face of regulatory changes. According to a report by PwC, over the past few years, interest in third-party vendors has risen by fifteen percent and that figure is continuing to rise.

AxiomSL’s recent expansion of Trade & Transaction reporting in to the energy and commodities sector has highlighted the importance of holistic reporting hubs. The solution supports multiple reporting regimes and is compatible with a wide variety of receiving parties, it can also integrate with multiple data sources and is even capable of connecting to cloud-based systems. A reporting system based on straight-through processing is used, this consumes information generated across all business functions (treasury and commodities etc.) and pulls together feedback from several repositories in to a single dashboard – with no external systems involved.

With MiFID II and SFTR just around the corner and the ongoing updates to EMIR and Dodd-Frank, the scale of change is presenting firms with profound challenges, and those that can deal with them well will reap valuable benefits. There are numerous success indicators off the back of effective and efficient reporting:

  • Risk reduction; accurate data, timely reporting and suitable control
  • Cost optimisation; compliance costs are significantly decreased when regulations are analysed holistically
  • Business change adaptability; a scalable process ensures future requirements across geographies are met swiftly
  • Control framework; exception and failure management are vital when delivering multiple reports to regulators across regions

Ultimately, firms need to take a more strategic approach and accept that the process is a transformation. Winners in this area will be those that look beyond basic compliance, take the opportunity to make their systems more responsive to regulatory changes and approve operational efficiency.

To learn more about AxiomSL’s Trade & Transaction reporting solutions, please click here.