The growing role of reconciliation in meeting regulatory requirements

The years since the financial crisis have seen swathes of new regulation introduced across the financial sector. For a period, it seemed as though there was a new requirement every month, with banks and buy-side firms scrambling to adapt.

Recently, though, the introduction of ‘big bang’ regulations has been less frequent. Regulators have been working on refining initiatives such as EMIR, MiFID, Dodd Frank, and more. These tweaks and adjustments may appear superficial, but for operations teams, they can still bring great pain. Even a minor change to data fields, thresholds or requirements can have significant operational consequences.

Beyond this, regulators are also looking more closely at what firms are actually submitting. It’s no longer enough to tick the compliance box – regulators are drilling down into the detail and questioning data errors and omissions more often than ever. They’ve made no secret of this – in the past couple of years, the Bank of England, ESMA and the CFTC have all released programs or reports focused on data quality issues.

In short: Regulators will accept nothing less than data which is timely, accurate and complete. This shouldn’t present a problem for most firms, right? Wrong.

The Data Complexity Challenge

The complexity of the average firm’s systems, data and processes, coupled with the challenging nature of regulatory reporting and compliance requirements, makes having total certainty in the data you are delivering to the regulator more challenging than it should be.

Data is stored across multiple repositories, making it easy to miss key elements. Different shapes, sizes and formats of data can be extremely difficult to integrate. Visibility and transparency can be impossible to achieve.

This is why so many banks, buy-side firms and other financial institutions are now coming to us with one request: to make sure the data they are reporting is timely, accurate, and complete.

Staying in Control

Maintaining full control of regulatory compliance isn’t just about regulatory reporting (although our Connect for Regulatory solution supports this). It’s about having automated reconciliations and controls in place to give you visibility of, and control over, your operations and data in order to confidently meet various regulatory standards.

Our Control for Intersystems solution reconciles data for regulatory use cases across the globe, including:

• Reconciling front- and back-office data against regulatory reporting submissions and providing completeness, consistency and data quality checks for a corporate and investment bank managing extensive FINRA reporting obligations.
• Automation of complex controls enabling a tier one bank to comply with G20 regulatory reporting requirements.
• Reconciliation of collateral activities with balance sheet information to ensure accurate, timely compliance with Canadian H4 regulation.
• Real-time exception management of reported FINRA TRACE data for a global firm.

Going Beyond in Regulatory Reporting

It’s no longer enough to submit your reports and hope for the best. If the regulator asks, you need to be confident that your data is complete and correct – and be able to demonstrate why this is the case. Effective, automated control of your data is the only realistic way to achieve this.

To learn more about what regulators expect of financial institutions when it comes to data quality, get to know Gresham's Pulse Data.

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