The Dodd-Frank Act – Swaps and Derivatives

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AxiomSL’s strategic regulatory platform is designed to help our clients with all current and future global Trade and Transaction Reporting requirements. All of the data collection, consolidation, validation and submission required for compliance with any and all transaction reporting regulations and directives is available on our single universal solution.

AxiomSL’s flexible, scalable, transparent solution provides all of the functionality market participants need to comply with the transaction reporting requirements of the Dodd-Frank Act. All in-scope trades are identified, aggregated and validated before being reconciled and submitted to the Swap Data Repository (SDR) of your choice in their required format.

AxiomSL’s ‘one platform’ model also supports many other types of regulatory reporting in jurisdictions all over the world. By using the same system for all of your regulatory reporting needs, AxiomSL can greatly reduce the cost and complexity of regulatory compliance.

The Dodd-Frank Act – Swaps and Derivatives: The requirements and challenges

This regulation is the implementation in the USA of the 2009 agreement by the Group of Twenty (G20) countries to strengthen the regulation of the over-the-counter (OTC) derivative market. It is the equivalent of the European Market Infrastructure Regulation (EMIR) in the European Union (EU).

Unlike in the EU, Commodity Futures Trading Commission (CFTC) trade reporting regulations will be applicable to only the large financial institutions with high trade volume and notional risk (defined as having more than US$50 billion in assets) as well as Major Swap Participants (MSPs) on the buy-side, such as mutual funds and institutional investment fund groups. Hedge funds and Large Asset Management firms with captive broker-dealers must report their derivatives trades as well.

All eligible institutions are required to submit any in-scope OTC derivative transactions to a Swap Data Repository (SDR) approved by the CFTC on an intraday basis “as soon as technically practical” (ASATP) basis, following the conclusion, amendment or termination of a contract. Unlike EMIR, Exchange-Traded Derivatives (ETDs) are not required to be reported under Dodd-Frank. ETDs are currently regulated by the U.S. Securities and Exchange Commission (SEC) and are reported to repositories attached to CCPs or exchange plus clearing houses. Only one counterparty must report each transaction. The delegated reporting counterparty that will report the transaction is decided before or at the beginning of any trades. The fields to be submitted to SDRs are numerous and complex requiring a great deal of counterparty and common data information on each transaction.

Market participants face a serious challenge to ensure they continually identify and report on all in-scope trades. Depending on the size of the institution in question and the nature of its business, reporting volumes could be very large. The deadlines involved are aggressive and call for a highly accurate, automated solution.

The key benefits of AxiomSL’s change management platform

Minimizing the cost of compliance: AxiomSL’s single platform is designed to adapt to all existing internal and external regulation requirements across the enterprise. The platform provides the flexibility to adapt to constantly changing multijurisdictional regulations, empowering financial firms to calculate, aggregate, enrich, reconcile and validate data across siloed systems seamlessly.

By separating data management from the regulatory template, AxiomSL’s platform ensures fast and cost-effective upgrades. AxiomSL monitors all of its solutions in real near time, ensuring that that it will always be up to date and enabling users to test new regulatory developments well in advance of ‘go live dates’.

Reducing the reporting burden: AxiomSL’s platform eliminates many manual enrichment processes greatly reducing the size of the operational team required to perform compliance related tasks. Our clients are given the ability to automate workflow processes, enabling them to scale their business faster with less dependency on expensive and time consuming back office processes. Additionally pre-submission validation checks allow our clients to proactively deal with errors before submission, thereby minimizing resubmissions and ensuring data quality. 

AxiomSL’s platform keeps track of changes even down to the lowest level of granularity to the source data which then remains fully auditable. Our platform has a complete drill-down capability to the source data to quickly identify exceptions, missing or incorrect data.

Transparency and control: AxiomSL’s platform enables users to have full transparency of the entire workflow since the source data is never transformed during the process. Source data is protected to ensure that no unauthorized changes are made. Personal information can be masked and made accessible to only permissioned users. All changes to the system or data are logged creating a fully auditable trail.

AxiomSL’s single platform allows for global oversight of multijurisdictional requirements and deadlines and a controlled sign-off process on reports prior to submission. Email alerts can be added as part of the workflow process to inform business, technical and IT users where things have failed/passed or to remind users of impending deadlines or missed requirements.

Regulators expect comprehensive and granular reporting, signed off at the board level. This requires both accurate reports and high-quality data, supported by effective data governance. Failure to meet such requirements or prove that controls are in place to identify discrepancies can lead to fines and higher capital limits that will push up firms’ costs.

Data governance: With increasing data challenges, the unarguable fact is that today major financial institutions around the world are focusing on lineage, data quality, integration and metadata to establish a solid foundation for data accuracy and process governance. This includes showing and reporting on how all upstream and downstream objects have traveled and were impacted by a change to that data throughout the entire process, with an audit trail and validation checks at the business rule or report level, allowing complete control over their reporting.

Therefore, our clients have a much greater level of trust in their data as they can track when changes were made and are able to trace and demonstrate the impact of this change. Unlike other vendors, we’re agnostic on the source format, and over the years our data integration capability has become our flagship which enables us to deploy strong global and/or regional automated processes to strengthen data governance and enhance banks’ ability to better understand and manage their risk and regulatory exposure.



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