Managing core challenges for trade reporting compliance in Asia

Evolving global OTC market structure and regulatory requirements sought to reduce systemic risk in the derivatives markets introduced by US CFTC, EMIR as well as Asian jurisdictions, are transforming how the industry operates. Complexity in managing financial systems, data and connectivity, as well as mandates to standardize trading, clearing and trade reporting are putting pressure on all market participants as compliance and technology costs continue to grow.

As enhanced transparency is a key principle across most new regulations, existing systems, data models and internal processes of many firms are often inadequate to meet heightened compliance obligations of a cross-jurisdiction regulatory trade reporting environment.

In response, IHS Markit introduced the Integrating Reporting solution in alliance with Catena Technologies in 2016. The service supports transactions across all asset classes, plus valuation and collateral reporting to multiple jurisdictions and key trade repositories.

In Asia, regulatory challenges are compounded by the fragmented nature of the markets and regulatory focus on products more prevalent in the region, such as FX derivatives and equity-linked OTC derivatives. For example, in contrast with other major global markets, regulators in Hong Kong and Singapore require 'nexus' trades, i.e., trades that originate in their jurisdiction but are booked elsewhere, to be reported locally. Thus, it is not uncommon for even relatively smaller derivatives market players to be required to comply with regulations imposed by up to five jurisdictions when engaging in regional trading activities.

Driven by the success of the solution's powerful rule engine, quick integration process and flexible approach, IHS Markit was recognized for providing the " Best Solution in Trade Reporting" at Regulation Asia Award.

The award is a testament to our ability to help clients meet their global regulatory reporting obligations across multiple legacy systems in a highly controlled, scalable and cost-effective manner. It also demonstrates we are a trusted partner for handling a sheer amount of trading information by the industry and supervisory bodies.

A large regional bank in Asia opted for Integrated Reporting to meet its requirements for a more controlled, robust, multi-asset and cross-jurisdictions reporting solution. In addition to workflow, reconciliation and control dashboards, the solution was also valued for its efficient deployment within a challenging timeframe and scalability in supporting the bank's future regulatory compliance needs as they increase their global market reach.

We are delighted that the MarkitSERV team has been recognized for its excellence by Regulation Asia. We thank our clients for their support and our colleagues for their valuable expertise and efforts. We look forward to building upon our successes and continuously delivering superior regulatory reporting services to the market.

Posted 21 February 2020 by Julian Chesser, Managing Director, Trade Processing Post-trade platforms for Asia Pacific, S&P Global Market Intelligence

S&P Global provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.