So Many Trade and Transaction Regimes, So Little Time

Trade and Transaction Regimes: So Many, So Little Time 

The European Securities and Markets Authority (ESMA) has recently postponed the April 2020 inception of Securities Financing Transactions Regulation (SFTR) due to the global COVID-19 crisis. ESMA has announced that while it anticipates that supervisory actions towards entities subject to SFTR obligations will not be prioritized now, it nevertheless expects Trade Repositories (TRs) to be registered in time for the next phase of reporting. For credit institutions, investment firms, central counterparties, and central securities depositories and relevant third-country entities, this means that SFTR reporting will begin as of July 2020.

As regulators layer on global requirements – SFTR being only the latest one – counterparties require a sustainable process for trade and transaction regimes’ regulatory submissions. When addressing new regulations, counterparties struggle with non-traceable data sources and often opaque in-house reporting solutions. As a result, they seek a regime-agnostic approach supported by a holistic and technologically advanced platform. This is true under the best of circumstances, but absolutely critical in times of market volatility and a pandemic crisis affecting all parts of the globe.

Trade and Transaction Regimes: I never said it would be easy…

With the introduction of yet another regime to report on, counterparties are asking themselves if they are prepared from a data management and technology perspective.

  • How can we efficiently manage data collection, validation, enrichment, and submission requirements across regimes, even as new ones are added?
  • What are best practices for addressing the reconciliation of unpaired and unmatched trades?
  • Are we technologically prepared to automate all TR submissions, including delegated submissions
  • How do we implement a scalable approach that will optimize resources while ensuring transparency?

Managing data across disparate systems and reporting to different TRs is only half the battle as counterparties may not have adequate processes in place to address:

  • Expanding requirements
  • Data quality issues
  • Determining reporting eligibility
  • Resolving data quality exceptions

Pairing/Matching Issues

Adding to their challenges, if counterparties have unpaired and unmatched reconciliation issues – these will be flagged by the TR. Since the root cause of most reconciliation issues is typically data quality, resolving exceptions requires complete and transparent access to submission data and the details of the original trade. If a counterparty does not have transparent drilldown into unpaired and unmatched reconciliation instances, they cannot determine the cause of the data quality issue and are therefore unable to resolve them.

Avoiding Siloed Processes

Furthermore, if no regime-agnostic approach is implemented, counterparties become bogged down by piecemeal, ad hoc processes for data collection, validation, enrichment and submission for reporting to different regimes. Regime-agnosticism is the key to seamless and efficient Trade and Transaction regimes management across multiple reporting regimes.

Too much of a good thing can be wonderful!

Given current and ever-evolving global trade and transaction regime reporting requirements, counterparties seek a solution that will enable them to flexibly and quickly respond to regulatory changes in a sometimes-unpredictable world. When they can seamlessly integrate a solution with other systems in the trade and transaction universe, counterparties benefit from a non-invasive approach, enabling them to reduce implementation time and costs and deliver complete, timely, and accurate regulatory reports across all global regimes. Once counterparties have implemented these best practices, more and more regimes no longer seem overwhelming. In fact, they are positioned to harmoniously address all trade and transaction regime requirements in no time at all!

With a platform that delivers clean, validated data with a single, regime-agnostic trade and transaction solution, counterparties are enabled to confidently and efficiently comply with regulatory requirements, optimize resources and derive insight from transparent and trusted data.

Even if Mae West would disagree, there is still time to address all those regimes.

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