Compliance Moves to Cloud
Developing and using technology to comply with evolving Dodd-Frank swaps regulations can be a costly and complex task for trading and investing firms. Managing vast amounts of data from disparate systems will become more of an issue with the approaching European Market Infrastructure Regulation (Emir) and the Regulation of Energy Market Integrity and Transparency (Remit) reporting deadlines.
“Everyone, including end users, has to report on the scale of their (trading) operations,” said Arun Karur, vice president at Sapient Global Markets. “The scope is OTC and also exchange-traded markets in Emir.”
Sapient has moved to the cloud with its Compliance Management and Reporting System (CMRS) enterprise platform, which the company says enables customers to collect and normalize data from multiple sources and transform it into formats accepted by all regulatory reporting regimes.
This will enable firms to quickly build, deploy and manage applications across a global network of data centers, Sapient said. “You need a dedicated team to deploy” and update such a system, Karur said.
Among the challenges is delivering the right data efficiently to swap data repositories (SDRs) in the correct format. Sapient said it is the only system that can collect and normalize swaps and OTC data from multiple sources, transform it to formats accepted by various regulatory destinations, configure it in compliance with all applicable rules, and transmit to data repositories.
“The building blocks will be the same for Emir and the upcoming jurisdictions of Canada, Singapore and Australia,” Karur said.
The Sapient team’s background in technology consulting led it in 2010 to help more than 20 North American clients prepare for the enactment of Dodd-Frank’s Title VII, which created a framework for the regulation of swaps markets. In the compliance space, a benchmarking survey conducted by Sapient pointed to the need for leveraging technology and depth of understanding of all core operational aspects of the business to create a generic CMRS product.
Two of the biggest current challenges are navigating and building functionality that helps clients understand the implications of ever-evolving rules and technologies, as well as shifting timelines.
“A lot of it is legalese, and though clients are often relieved when a date is moved, they become doubtful about which rules will stick and other ambiguities,” Karur said. How the required data reporting should be delivered in regard to new regulations is a specialization, he added.