The current implementation of regulatory reporting for the OTC market is expensive and error prone. The UK FCA and a group of reporting parties are looking at ways to improve the technology.

Have you been involved in a regulatory reporting project for OTC (ISDA) products? In my career I took responsibility for implementing EMIR reporting for a well known UK CCP, so I have first hand experience on the trials in delivering data. Observations that many would agree with:

• The reporting rules are written mainly by lawyers or regulators and expressed in your national language
• Interpreting these rules usually ends up being the job of a super-expert who immerses themselves in the problem
• Every firm has their own approach, not everyone agrees on the one true interpretation
• It's like communication with aliens, we think we know what they want to hear but none of us quite agree (try watching Arrival https://www.imdb.com/title/tt2543164/)

The UK FCA has grasped this global nettle and with help from end-users begun to define the way forward. Their project has considered:

• The cost to firms in understanding and implementing the existing regulations
• Data modelling including the ISDA CDM and FpML
• Exploring the cost/benefit of solving this problem
• The feasibility of developing and deploying a machine-readable version of the reporting rules
• Whether any third party solutions already exist to solve this

My own opinion is that the process of mapping square shaped data from OTC users into the round shaped hole of regulatory reporting will always involve a conceptual challenge, but perhaps providing a fully digital interface and requirements definition might exclude poor quality data and improve things for regulators. 

More information

• The UK FCA DRR project https://www.fca.org.uk/innovation/regtech/digital-regulatory-reporting 
• Commentary from JWG and others: https://jwg-it.eu/uk-regulators-must-bless-the-code-to-operationalise-emir-digital-regulatory-reporting
• The latest FCA report on the DRR https://www.fca.org.uk/publication/discussion/digital-regulatory-reporting-pilot-phase-2-viability-assessment.pdf