Our ReportShield™ assurance services are tailored for a number of global trade and transaction reporting regimes, including SFTR, EMIR, MiFIR/MiFID II, Dodd-Frank and more.
What is SFTR?
The Securities Financing Transactions Regulation (SFTR) is an extensive set of requirements from ESMA. Article 4 – the reporting requirement – is due to go live in April 2020 for investment firms.
The regulation aims to improve transparency and reduce risks in securities financing markets; namely the repo, securities lending, buy-sellback and margin lending (prime brokerage) markets.
Firms trading securities financing products (financial and non-financial) must report details of all securities financing transactions to ESMA via a trade repository.
Pre go-live SFTR reporting services
Led by our SFTR subject matter expert Jonathan Lee, our pre go-live services include:
- Pre go-live testing of the accuracy of your reporting data
- Programme design and implementation
- Development and evaluation of an appropriate controls environment
- Training on the reporting requirements
- Subject matter expert support.
Post go-live SFTR reporting assurance services
Our ReportShield™ quality assurance services are being adapted for SFTR reporting and include:
- Testing of the accuracy of every SFTR transaction report
- Testing and mapping of all client identifiers, contractual and collateral reference data
- Advanced regulatory reconciliation between the records in your primary trading system/s and the records held at the trade repository
- Testing that all delegated reporting has been reported accurately and completely
- A control framework including policy documentation and guidelines to meet the reporting requirements.
What is MiFID II Transaction Reporting?
Transaction reports are a key tool for regulators to detect and prosecute market abuse, as well as insider dealing cases.
The revamped version of the Markets in Financial Instruments Directive (MiFID) II, is designed to offer greater protection for investors and inject more transparency into all asset classes. The reporting obligation went live in January 2018. Some of the differences between MiFID I and II are:
- MiFID II captures all asset classes – MiFID I only caught equity and debt related instruments
- FX, commodity and interest rate derivatives are now potentially reportable under MiFID II
- Increase from the MiFID 23/24 fields to 65 XML fields
- Harmonises transaction reporting across the EEA
- New reference data standards – Legal Entity Identifers (LEIs) replace BICs and FRNs
- Change in the definition of entities brought within scope
How we can help
Testing and reconciliations are mandatory under Article 15 of Regulatory Technical Standards (RTS) 22 and the regulator has made it clear that its focus is firmly on data quality.
Our ReportShield™ quality assurance services are designed to specifically address Article 15’s requirements and include the following:
- Accuracy testing of MiFID II trades reported to the regulator
- Advanced reconciliation on each platform/asset class to ensure completeness
- Implementation of a control framework tailored to your business
- Client and counterparty reference data testing
- CPD-accredited training on the reporting requirements bespoke to your firm.
What is EMIR?
The European Market Infrastructure Regulation (EMIR) is an extensive set of requirements from the European Securities and Markets Authority (ESMA).
The regulation aims to improve transparency and reduce risks in derivatives markets.
Firms trading derivatives (financial and non-financial) must report details of all financial derivatives contracts to ESMA via a trade repository. This includes over-the-counter and exchange-traded derivatives.
How we can help
Our ReportShield™ quality assurance services provide the controls you need to be compliant with EMIR trade reporting including:
- Accuracy testing of all EMIR open positions at the trade repository
- Checking and mapping of all client identifiers
- Advanced reconciliations between a primary trading system and records held at the trade repository
- Checking that all delegated reporting has been reported accurately and completely
- A complete governance framework.
We can also provide expertise in a range of areas including remediation of inaccurate EMIR reports as well as selecting a trade repository.
What is Post-Trade Transparency (PTT) reporting?
It’s not just transaction reporting under MiFID II that firms need to be compliant with – compliance with real-time trade reporting is expected by regulators too. It’s only a matter of time before there is greater scrutiny from regulators on Post-Trade Transparency reporting accuracy and potentially, the introduction of penalties or sanctions for incorrect reporting.
Articles 14–23 of MiFIR outline the transparency requirements and obligations for investment firms across asset classes as defined in Regulatory Technical Standards (RTS) 1 and 2.
What, when and how do you report?
- Near to real-time reporting to the market via FIX (Financial Information eXchange)
- One minute for equity and equity-like products
- 15 minutes for non-equity products (reducing to five mins by 2021)
- Reports are sent to an Approved Publication Arrangement (APA) for publication to the market
- Field requirements are limited to the trade financials (less than 15-20 fields)
- Anonymised and aggregated reporting to avoid reverse engineering.
How we can help
Our ReportShield™ quality assurance services have been adapted to fit the requirements of RTS 1 and 2, providing you with the controls you need to demonstrate you are meeting your real-time reporting obligations.
The key services include:
- Accuracy testing – to assess the correctness of all data on all trade reports sent to your APA of choice
- Advanced regulatory reconciliation – to check the completeness of the records in your primary trading system/s against those records held at the APA. This will include reconciliation of your input vs APA output, reconciliation cross-entities and reconciliation cross-regulations and cross-client base.
What is DFA Reporting?
The Dodd Frank Act (DFA) is aimed at improving transparency and reducing risks in derivative markets. It is a wide-ranging package of obligations on firms based in the US and in other jurisdictions relating to their internal and external business conduct, including reporting.
What do you have to report?
Firms trading derivatives must report details of swaps to the Commodities and Futures Commission (CFTC) via a swap derivatives repository. This includes the primary economic terms and any event that affects the valuations or terms of the contract (Part 45) to allow regulators to monitor systemic risk. There is also an obligation on firms to report in real-time to provide transparency on pricing to the market.
Like EMIR, DFA covers over-the-counter derivatives but unlike EMIR it excludes exchange-traded derivatives.
How we can help
Our ReportShield™ quality assurance services give you the ability to demonstrate appropriate control over your reporting obligations. Features include:
- Accuracy testing of all DFA open positions at the trade repository
- Full control framework including governance structure, policy documentation, guidance and training for staff on the reporting obligation
- Completeness, validity and accuracy of reporting for Parts 43, 45 and 46
- Cross-regulation testing to ensure consistency with other regimes
- All client identifiers checked for appropriateness for the regulation and properly mapped
- Application of an advanced reconciliation between a primary trading system and the records held at the trade repository
- Validation that firms are classifying their clients and counterparties correctly in terms of US persons and regulatory status ie. swap dealer, non-swap dealer etc…
We can also help you comply with your reporting obligations under other regulatory regimes such as HKMA, MAS, ASIC, FinfraG, and Canada reporting.
Our services have been developed for multiple regulatory regimes so you can be sure your reporting is accurate and complete no matter what the international regulation.