Cappitech at S&P Global Market Intelligence
Struan Lloyd
12 December 2023
Struan Lloyd, head of Cappitech at S&P Global Market Intelligence, discusses key findings from the annual Global Regulatory Reporting Survey. Addressing challenges of inadequate resources and data quality management, he emphasises the critical role of good data in effective regulatory reporting
Image: stock.adobe.com/STUDIO.0432 / Struan Lloyd
S&P Global Market Intelligence has unveiled the results of its annual Global Regulatory Reporting Survey. Can you provide us with an overview of the key findings?
The survey, conducted by our team at Cappitech, brought to light some crucial insights. One of the primary challenges faced by firms in regulatory reporting is the inadequacy of resources and the management of data quality.
Surprisingly, less than half of the respondents feel that their firms are appropriately resourced, despite having obligations in multiple jurisdictions. Additionally, only 19 per cent of respondents believe that their data quality is "very high", with more than half identifying the remediation of existing data as a significant capability.
Could you elaborate on the impact of these challenges on effective regulatory reporting?
Effective regulatory reporting hinges on good data, and firms require the right tools and resources to achieve this. Without these, they risk increased costs, potential fines, and a regulatory reporting process that hinders rather than facilitates their operations. It is crucial for organisations to address these challenges to streamline their regulatory reporting needs.
The report highlighted positive developments in the regulatory reporting space, such as a collaborative approach among market participants and a commitment to leveraging technology. How do you see these factors shaping the landscape?
There are certainly positive trends. Market participants are increasingly adopting a collaborative approach, fostering shared learnings and consistency in reporting.
The commitment to leveraging technology, including artificial intelligence (AI) and machine learning (ML), is indicative of a forward-thinking industry. The use of vendors has increased, with 75 per cent of firms now utilising a vendor in some capacity, reflecting a willingness to embrace technological solutions.
Can you provide insight into the readiness of firms, particularly in Europe, and regarding specific regulations?
Certainly. The report suggests that the market is better prepared for the regulatory changes in 2024 than for any time previously. In Europe, firms are well advanced ahead of the European Market Infrastructure Regulation (EMIR), with 75 per cent of them prepared or on track.
The preparations for Commodity Futures Trading Commission (CFTC) Phase 2 have also improved significantly, with 60 per cent of firms already ready or on track. Preparations for Japan Financial Services Agency (JFSA), Monetary Authority of Singapore (MAS), and Australian 色花堂and Investments Commission (ASIC) regulations are progressing well, with JFSA leading the way due to its earlier deadline.
It seems that there is a shift from merely meeting regulatory requirements to a more strategic and comprehensive approach. How does this increased maturity within the market benefit regulatory reporting?
The shift in focus is notable. We see a transition from a reactive stance to a more proactive and strategic approach that considers multiple jurisdictions. This approach involves identifying resourcing and data quality challenges from a bottom-up perspective and addressing them ahead of time. This increased maturity within the market is promising as it will result in better, more effective, regulatory reporting that aligns closely with regulators' monitoring and oversight needs.
The report covers various factors influencing the regulatory reporting space including vendor selection, reconciliation challenges and the use of automation. Can you highlight any key findings in these areas?
The report delves into several critical factors such as vendor selection, reconciliation, and challenges related to Unique Transaction Identifier (UTI) matching and pairing. Automation and technology also play a pivotal role in shaping the regulatory reporting landscape and the findings provide valuable insights into the current state of these aspects.
Could you tell us more about the survey's methodology and the professionals involved in providing insights?
The survey, conducted in the summer of 2023, gathered responses from 70 professionals across EMEA, the UK, North America and APAC. The majority of respondents represent banks or asset managers, with 30 per cent working for other organisation types such as brokers, corporates and proprietary traders. This diverse representation ensures a comprehensive and well-rounded perspective on the state of regulatory reporting in the industry.
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