Firms Prepare for Dodd-Frank

Terry Flanagan

Data issues dominate discussions.

Financial firms are realigning critical data collection and reporting processes in order to avoid Dodd-Frank regulatory pitfalls.

Dodd-Frank regulations demand a revision of both business practices and technology solutions, from determining the correct compliance status to ensuring systems can adequately collect, retain and report transaction-related data.

In particular, firms are harnessing their ability to capture and manage data via “messaging appliances.”

“Companies have the opportunity right now to prepare messaging appliances to correspond with the transfers of data from trading activities to swap data repositories,” Ian Jones, senior strategist for commodity risk at RiskAdvisory, told Markets Media. “The messaging appliance helps companies take into account the real-time or near-time reporting that’s required.”

For example, for reporting, companies need to know how many messages have been constructed as a trade day progresses. “Have they been properly formatted? Have they been validated? Have they sent it out the door? Do you have the acknowledged-receipt back from the SDR? Can delivery be proved?” said Jones.

Reporting requirements may fall upon the middle office or the compliance department or back office, but in either case companies need to deal with managing queues of messages that must be provided to swap data repositories in real-time.

“It’s important to take an inventory of all your company’s data, to know its attributes and understand the very specific fields,” Jones said.

The Federal Register now provides tables that companies can use as guides for the specific fields they’re asking for,  he said. “In some cases, the requisite information may reside in another system or in a downstream process, and time-stamping will be a key issue,” said Jones.

“There’s going to be a lot of data generated, and you can expect that you may do a deal at 10:00 and report it at 10:15 in the morning,” Jones said. “Later on in the afternoon, your confirmation process might actually require you to change the deal in some way. If you do, and you perhaps cancel and re-book the deal or you amend it, then via the messaging appliance you can send a corrected report out to the SDRs.”

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