We presented some of Message Automation’s experiences with our trade reporting clients in Europe, North America and Asia.

South Africa prepares for Trade Reporting

Thanks to Andile, Message Automation’s partner in South Africa, who hosted a number of banks at a reception in Johannesburg recently. Ian Chester and I presented some of Message Automation’s experiences with our trade reporting clients in Europe, North America and Asia. With South African trade reporting now announced, we were able to suggest some of the challenges and potential pitfalls which South African banks may now face. Some interesting discussion afterwards on the pros and cons of multiple v single and global v local trade repositories.

Our views on the best way to implement a TR solution, and achieve some strategic benefit along the way are encapsulated in the PDF attached below, or by visiting us directly here.

Getting value from trade reporting solutions

You are now live and fully compliant with all the various regulations requiring reporting of your OTC and listed derivatives. You have invested substantial time and money in achieving compliance but due to the tight go-live dates your current solution is less than optimal with limited transparency and still substantial manual overhead, particularly in managing incoming information from the TR’s, and satisfying your auditors.

Now, with the benefit of hindsight you realise that your reporting solution could be improved, not only to solve the above issues but also to provide a rich source of management and risk information. The question is – how to do this without writing off your investment and starting again, which is not viable practically or financially.

Message Automation has a leading cross-asset trade reporting solution deployed around the world and covering multiple jurisdictions. While most of our clients have implemented our full solution, many for multiple jurisdictions, there are discrete elements of our overall package that can be used to complement your current solution and solve the issues highlighted above in a surprisingly short timeframe by combining our best-of-breed technology,  our deep domain knowledge of trade reporting, and our ready-made library of Trade Repository (e.g. DTCC, Unavista, Regis TR, etc.) and common source system (e.g. Calypso, Murex Summit etc.) formats.

Typical “problems”

Trade visibility
You have built the solution, you extract data, enrich it and send it to the trade repositories but your end users don’t have any way of seeing exactly what has been sent or received back from the repositories.

This is a common concern, particularly from the Operations or Middle-Office managers we talk to.

MA has a state-of-the-art dashboard, insideTRACK, which is an integral part of all of our solutions. It can however, be deployed completely independently from our other core software. The dashboard offers the following benefits:-

• It can draw and consolidate data from multiple internal systems and external party messages.
• End user views can be configured by you, tailored for individuals or groups allowing users to review the data you have both internally and return messages from your TRs
• We can also retrieve and load TR position reports into the solution allowing these to be viewed within the dashboard.
• Views can be filtered, sorted with moveable columns, with all these selections being saved by user.
• The dashboard can display metrics in chart form and, providing the data is available could be configured to display compliance with reporting time lines
• The dashboard can usually be deployed and providing value with a few weeks
• The solution is browser based providing lightweight cost-effective deployment

Changing decision rules

You coded all the Dodd Frank logic, then you added to the code for the EMIR rules, now you have new jurisdictions you need to add plus ongoing changes to EMIR (Level 1 and beyond). This internal code is becoming difficult to manage and the people that wrote it have now moved on to new projects.

Determination rules are complex and are constantly evolving. Banks and Buy-Side firms that we talk to are now trying to replace hard-coded logic in favour of more flexible rules-based solutions.

MA has a best of breed decision engine which has already been configured to reflect industry standard reporting rules across multiple jurisdictions and repositories These can be supplied ‘off the shelf’ to new clients and then tailored to client-specific requirements, greatly reducing implementation time and cost and providing ‘future-proofing’ as we contract with you to maintain and update the standard rules sets.

For example, using your current Trade Reporting inputs, our solution can determine jurisdiction scope and for each jurisdiction whether you are a reporting counterparty (DFA) or UTI generator (EMIR) and then allow you to monitor and track what was reported where for management and audit purposes.

Validation that the correct data has been sent

You met all the initial requirements of Dodd Frank or EMIR but as reporting regimes evolve and regulators actually start to look at the data, it is difficult to change your solution to ensure that the content is complete and correct.

ESMA Level 1 validation rules are a good example of refinements being imposed on the market whereby previously ambiguous regulatory requirements are being made more prescriptive. This obviously makes sense from the regulators point of view and should facilitate inter-TR reconciliation.

As mentioned above, the MA solution includes a set of industry standard rules, developed for our existing clients across a number of jurisdictions and TR’s. These can be used either on a one-off or periodic basis to review your existing trade population and identify gaps in the data you are reporting;  or they can be inserted on an on-going basis as a validation layer which spots problems before trades are submitted to your TR. These industry standard rules can be supplemented by your own customised rules to provide a powerful audit check and/or pre-submission validation layer.

Matching your trade population

You have focused on getting trades reported to TRs by the required deadlines. However, you are now concerned that the actual data reported was incorrect or incomplete.

MA has deployed a matching solution with a number of clients which reconciles source data back to trade repository records to prove end to end that the bank has correctly reported for each jurisdiction as it should have done. We recreate reporting determination logic completely independently from your existing trade reporting solution. This allows us to define a “source” population by jurisdiction and compare this to the relevant DTCC position reports. Our end user dashboard allows users to easily match the two populations and manage any exceptions that come out of this process.

Now read our PDF below on why A Strategic Approach to Trade Reporting Makes Sense