When technology met regulation


For years, firms have endeavoured to manage the increase in regulatory mandates across the globe. The surge and evolution of reporting obligations has seen a rise in the number of reporting jurisdictions, submission frequencies, reportable data sets and products. Naturally, these advancements have far reaching implications across an organisation and to help mitigate this, firms have identified opportunities to streamline, centralise and automate functions that support the reporting process. In order to accomplish this, organisations have been looking to technology to drive and provide the necessary framework to support this agenda.

The marriage of regulation and technology has been an instrumental component in defining the landscape of regulatory governance. RegTech solutions and services have rapidly been challenging and changing the way in which firms implement their projects, effectively alleviating the operational load of complying with legislation and bringing huge benefit to the management and maintenance of reporting.


Accelerating ahead


RegTech providers have understood that firms need ample time to prepare and test for new or changing requirements. MiFID II is a prime example of the introduction of new data challenges, introducing the submission of Personal Identifying Information (PII), requiring the allocation of Legal Entity Identifiers (LEI’s) and significantly increasing the number of reportable fields. Technology has accelerated firm’s ability to do the data cleansing exercise early, focusing on data preparation and the importance of submitting accurate, integral and complete datasets to competent authorities. Pre-validation of data ensures firms can capture, locate and store valid regulatory information. These RegTech solutions give firms the opportunity to identify data gaps and inconsistencies prior to the general on-boarding. This early testing exercise offers additional advantages when it comes to resourcing, funding and supporting the operational and technical efforts required for implementation.


Insightful recyclable repository


The increase in regulation has also steered firms down a path of strategic thinking, generating a centralised, clean repository of business information that can be used far beyond just fulfilling the reporting mandate.  

This centralised regulatory hub contains a wealth of information regarding the firm’s primary activities, and efficiencies can be found in recycling this data for the management of multiple regulations; e.g. MiFID II, EMIR, Dodd-Frank. Firms can additionally use this repository to mine and glean effective information about the firm and strategically drive other business exercises.

Greater visibility and transparency over the regulatory reporting process is achieved when technology providers understand the importance of the compliance vision and develop innovative ways to supply this vital management information to its clients. As a result, firms have seen technology’s influence in enhancing the daily management of reporting, particularly with MiFID II, where leveraging the data warehouse has facilitated peer-to-peer analysis and surveillance opportunities.


Achievements now and into the future


Going forward, there are a number of industry initiatives and innovations that can further support this concept; blockchain, artificial intelligence (AI) and predictive analysis to name but a few. Areas such as big data supports detailed analysis across the full trade and transaction reporting infrastructure. Predictive analysis and AI will advance automation, further improving operational efficiencies, reducing error rates and ensuring consistency in data quality and the regulatory reporting process.  These technologies will assist and become integral assets in the decision making of financial firms in the future.