Key Regulatory Reporting Takeaways from Cappitech Roundtables

Roundtable Roundup

Over the years, Cappitech has been privileged for the opportunity to host roundtables with our clients across the globe. They are an opportunity for attendees to network with their peers, discuss industry trends and learn about upcoming products. For Cappitech team members, the roundtable provides a great setting to gain feedback from our customers.

Our recent roundtables were hosted in our London and Dublin offices. Along with regulatory content from Cappitech, the event included panels with industry experts with participation of members from the FCA, ISDA, FIA and clients.

Some of the engaging discussions from the events:

Data Quality

One of the recent trends heard from clients and regulators is that monitoring for completeness isn’t enough, and having in place processes to check for accuracy is key. This view was echoed by the FCA who stated the regulator was seeing improved data quality in reporting submissions, but ongoing challenges exist.

Reconciliation of EMIR data between counterparties has become a hot topic with the large increase in reconcilable fields under the REFIT going live at the end of April. Having tools in place to review submissions and address breaks was raised as a more critical solution firms need to have in place compared to being a ‘nice to have’ in the past. Involvement with industry groups that are establishing best practices to report various products was also cited as a core part of a firm’s practices to help improve overall data quality of submissions.

Future Changes

Last year saw the FCA and ESMA both introducing proposals to reduce regulatory burden but requiring another change in how to report. Roundtable speakers voiced their opinion on the subject.

From the FCA’s perspective, the goal of their proposal for MIFIR RTS 22 changes was to reduce the work and cost burden of submitting firms and improve data received for supervising for market abuse. This means reducing fields and scope of products that were deemed unneeded for the FCA as well as harmonizing fields to those of other regulations such as EMIR and SFTR.

The industry group panelists agreed that current duplication of reporting of the same transactions across multiple regulations is inefficient and removing it would reduce burden. They added that simplifying reporting doesn’t just cover removing duplicative fields, but regulators also need to evaluate the necessity of low value data points in the regulation. The challenge of supporting dual-sided reporting in the EU and UK versus a single sided approach in other jurisdictions was noted as another area that can be optimized. It was also noted that updates to the reporting standards should have predictable change cycles.

Global Alignment

One of the outcomes of regulatory changes for derivative reporting taking place in a short period of time across the globe was the alignment of many data elements across all these jurisdictions. From a data collection and reporting perspective, panelists believed it has been beneficial to leverage similar identifier fields such as LEIs, UTI and UPIs along with other data elements and values being harmonized. The FCA feedback was that they support alignment with other regulators, but will diverge on standards were deemed required to better supervise the markets.