A panel of experts representing a broad spectrum of financial industry participants joined Abide Financial and over 80 clients and guests at a recent event “Meeting the Challenges of New Reporting Rules”. Rob Barnes, Director of Regulation at FIA, Anne-Marie Segbedzi, Transaction Reporting Advisory at Barclays, Bill Stenning, Managing Director, Clearing, Regulatory and Strategic Affairs at Société Générale and Abide Financial’s regulatory expert, Mark Kelly participated in a lively debate on new and evolving regulatory reporting regulations, moderated by Chris Dingley, Abide’s Head of Sales.
Overall, panel consensus was that regulatory reporting regulations and obligations were here to stay and likely to become more complex over time as new rules in new jurisdictions came into effect. As one panellist noted “reporting is integral to core business activity, not an action at the end of a chain”. More than one panellist emphasised the need to view multi-regime reporting in a strategic not tactical way, laying the groundwork now for impending legislation and building a framework for all regimes – aligned with other market ‘conduct’ regulation including the Senior Managers Regime – rather than tackling each new rule and requirement in isolation.
‘Governance’ and oversight obligations are a key element of the reporting challenge and the panel noted the importance of putting in place systems that align oversight requirements and obligations across EMIR, MiFID, SMR and other markets regulation.
The panel observed that there is much confusion about requirements and obligations; many participants are concerned about things that don’t impact them because of a lack of clarity around types of reporting parties and the breadth of associated reporting obligations.
The panel also agreed that there remained huge challenges around data – the lack of ‘standardisation’ across instruments/assets and in respect of different reporting fields. There seems to be a fundamental lack of understanding of products, especially in the derivatives space, which makes things difficult and the decision to ‘standardise’ around ISIN ‘codes’ introduces new and additional challenges.
The question of single versus double-sided reporting was another key question addressed by the panel. Single sided reporting may seem like an easy solution but as all panellists agreed, it does not mitigate the responsibility of reporting parties to maintain oversight and control of reported data, even when the act of reporting is delegated to another party. Under new MiFIR rules, delegated reporting entities (e.g. banks) may also face issues with data privacy and client confidentiality (requirement to report more granular data down to individual trader level). In this respect, the panel observed a trend amongst a large proportion of buyside firms to control their own reporting workflow (including through third party reporting partners) and not rely on their banks or brokers to manage this function on their behalf.
Asked to predict the regulatory reporting landscape of the future (10 years down the line), panellists expected a move away from point to point reporting to a centralised, standardised reporting infrastructure with consolidated data (e.g. Trade Information Warehouse) and increased outsourcing of reporting workflows to specialist managed service providers). However, all were in firm agreement that there was no expectation of a quick or ‘cure all’ solution emerging any time soon and that reporting firms will have to continue to commit significant effort and resources to satisfying diverse and evolving regulatory compliance obligations.