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Regulatory Reporting in Financial Services: The Changing Landscape & Emerging Challenges

Capital Markets

Financial Services

September 30, 2022


Regulatory reporting used to be relatively static earlier. And hence the solutions were mostly in-house, bespoke. However, as the changes to regulatory reporting is evolving significantly, the concern is no longer limited to its compliance, but in overcoming the upcoming challenges accompanying the fast-evolving changes. One of the key factors is how to scale these solutions on an ongoing basis. Also, the complexity of requirements demands expert intervention significantly impacting operational costs.

What is financial regulatory reporting?

Financial reporting is the submission of data to a relevant authority in order to demonstrate compliance with the necessary regulatory provisions. Because of increasing public demands for transparency, following regulations is a vital part of creating public trust.

The scope of financial markets being regulated has increased exponentially over the years and so are its challenges. There is an ever-growing complexity around financial regulatory reporting and keeping up with it, compliance of diverse regulations across different regions in a similar time-period, dependence on various elements like manual processes, siloed systems and its capabilities to meet all the regulatory requirements is imperative. For example, if we consider regulatory transaction reporting, then we see significant enhancements, which have occurred, or will occur in the recent future:

RegulationFull FormRegionChangesTimelines
MASMonetary Authority of SingaporeSingaporeStarted their research and work based on CPMI (Committee on Payments and Market Infrastructures) IOSCO (International Organization of Securities Commissions) guidelines on UPI(Unique Product Identifier), UTI(Unique Trade Identifier) and CDE(Critical Data Elements).May 2022
ASICAustralian Securities & Investments CommissionAustraliaStarted their research and work based on CPMI (Committee on Payments and Market Infrastructures) IOSCO (International Organization of Securities Commissions) guidelines on UPI(Unique Product Identifier), UTI(Unique Trade Identifier) and CDE(Critical Data Elements).May 2022
CFTCCommodities Future Trading CommissionUSCFTC Re-write shifted to December 2022. Implementation to be done in 2 steps:
1. Adoption of different CDE, UTI and new validations.
2. Including the UPI and ISO 20022 XML (way of exchanging payments and messages), which might come into effect from late 2023.
Dec 2022
CSDRCentral Securities Depositories RegulationEuropean UnionRules on cash penalties are being implemented.
Disciplinary measures are being implemented to increase the efficiency in improved settlements by penalizing parties who fail to settle transactions on the intended settlement date
Feb 2022

These upcoming global and wide-ranging changes imply a shift in the technology modifications in the industry, trade repositories and regulators. Along with the usage of new technology also comes an important part of standardization. More and more regulators are coming up with plans to integrate the shift to standardization into their regulatory regimes and are becoming more data-led in their approach.

Recognize. Realize. Redefine.

There is an inexorable digital evolution in the financial markets and a matter of urgency to fulfil the requirements of data, speed and efficiency. In this fast-paced environment, the financial markets need to adapt themselves with tools which leverage technology-driven innovations. We have seen a paradigm shift from on-premises software to cloud-hosted tools which is also a part of including and investing in RegTech – that is upcoming and the need of the hour. The Financial Conduct Authority (FCA) has termed RegTech as ‘The adoption of recent technologies to facilitate the delivery of regulatory requirements.’ Using cloud technology for regulatory framework for financial reporting is thus one of the major things which is happening right now.

Cloud in Financial Services

In order to process huge amount of data and to maintain the complex requirements and regulations, cloud technology is beneficial as it eliminates the conventional limitations of old and long-established ways of working. While working for financial and regulatory reporting in cloud, we can make use of some features like data sourcing and integration, transformation, translation, enrichment and mapping of data based on different requirements, calculation and authentication of data and reports, and easy visual representation of data. Legacy transformation, managing risks, enterprise cloud transformation and governance, high availability and resilience, agility, fully managed products and services, and a production-ready strategy, all these form an integral part of cloud computing for regulatory reporting; and could provide a common platform for regulatory bodies and to configure the hardware and software required, which will provide operational efficiency, increased scalability and an opportunity for innovations.

Regulatory reporting framework in financial services on cloud can help to increase flexibility and adapt at a faster pace according to the business requirements in order to accomplish the defined goals. Functionalities of cloud like cloud libraries, plug and play, and pre-built components which can be used for storage, computation and vision can be used for accelerating the customization. It can be tailored as per specifications of the client and can also completely streamline the process flow with availability of solutions and insights at global/enterprise level, significantly improving the whole exception management and monitoring. Since, there is a binding requirement of regulatory transaction reporting to have enquiry or audit trails, cloud computing can help in assisting and resolving different queries which in turn can become an integral part of root cause analysis of any challenges which might come for transaction regulatory reporting. An important benefit of cloud computing for regulatory reporting is that, it can be cost-effective.

How Hexaware can help:

Hexaware’s Regulatory Reporting services are powered by Amaze® for Capital Markets platform.

The present-day solution landscape has many gaps and the current solutions are able to solve only partial problems and are inadequate. Our core objective is to enable our clients by providing full scope at one stop with optimal efficiencies and reduced risks. The automation capability which will be used will be helpful for minimizing manual intervention. There will be uniformity and consistency in data i.e. single version of data will be seen across all platforms and standardization will be done by integrating taxonomies and rationalizing reference data.

Amaze® for Capital Markets is a cloud native NextGen data management platform that leverages intelligent automation technologies to deliver self-service capabilities, superior end-user experience and operational efficiencies.

About the Author

Ketaki Panwal

Ketaki Panwal

Ketaki Panwal is a part of our Financial Services practice team. She has been a part of multiple engagements in planning and implementing cloud-based data management platforms, creating service offering solutions and managing finance applications across Banking and Financial services. Ketaki holds a Bachelor's Degree in Engineering (B.Tech) and a Master’s Degree in Management (MBA) from premier institutions of India.

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