Agile regulatory reporting: Why it's here to stay

21.06.21 Gresham

Philip Flood, Business Development Director, Regulatory and STP Services, Gresham Technologies recently joined a panel discussion hosted by A-Team Insight on regulatory reporting best practice.

A key lesson that emerged was the importance of agile regulatory reporting. Below, Philip explores why agility has become so crucial for your regulatory reporting operations.

Agility: some may say that the past 18 months have been about nothing but, with firms and their employees forced to adapt to new ways of working. But we are hearing more about the importance of agility from our regulatory reporting customers, as well as it being a hot topic on the panel discussion mentioned above.

So just why is agile regulatory reporting so important? The regulatory environment has exerted a fair amount of pressure over the past decade and the pace shows no sign of slowing. Consolidated Audit Trail, SFTR and CSDR are just some of the recent challenges that firms have faced. On top of this, you have changes to existing regulation – potential updates to EMIR, Dodd-Frank and MiFID II are being watched carefully by the industry.

Our customers tell us that they dread these changes more than large new pieces of regulation. The reason? Reporting which has already been implemented will have workflows spanning your entire organisation – and when this regulation changes, these workflows must change, too. Front office, STP, other vendor systems, data models, validation and business rules – all of these will be affected.

It's not hard to see how this pace and pressure make an agile approach to regulatory reporting vital. But it’s important that agility isn’t confused with haste. In the past, firms had to react quickly to regulatory change, without the time to craft a strategic response. This has left many organisations fighting an increasingly unsustainable number of point-to-point tactical solutions. We need less of this, not more, which is why a strategic regulatory reporting plan – with agility built in - is essential.

This is important because it's not just regulation that is changing, but your whole operating environment. Severe trading volatility puts pressure on reporting and exception management tools. Technology developments mean an increasing number of moving parts and systems. The infrastructure landscape moves on – last year's exit of CME from the regulatory reporting space and the MarketAxess acquisition of Deutsche Borse Group's regulatory reporting hub challenged firms to quickly migrate to new reporting venues.

Regulators are also playing their part, with the Bank of England, ESMA and others shining a spotlight on the role of data quality and technology in regulatory reporting. The outcome of these reports may well lead to changes, and firms must be ready to adapt.

So how can you embed agility in your regulatory reporting function? Automation is an absolute cornerstone. The volumes of reportable trades under regimes such as the Consolidated Audit Trail make spreadsheets and other manual solutions completely unworkable, hampering any efforts at agility. The time has come to replace these legacy systems with a purpose-built solution capable of handling all of your regulatory reporting in one place. With a simplified solution you'll be in a position to respond, not react, to changes to regulatory requirements, increasing your flexibility.

An extension of getting the right technology in place is backing it up with the right quality of data and data governance. As mentioned on the panel discussion, mapping and prioritising your critical data elements, defining roles, responsibilities and ownership, setting clearly defined data quality rules and ensuring that you are able to track your data lineage are all crucial. This enables you to work towards using a common data model for your organisation's reporting requirements, overcoming the silos that slow so many firms down.

With increased agility comes reduced costs – something which many regulatory reporting teams are under pressure to achieve. Embedding agility in regulatory reporting allows you to take things one step further, turning it from burden and cost to potential value-add which allows you to deploy your data and reporting processes for use in revenue generating projects.

It’s clear: Agile regulatory reporting is here to stay.