Regulatory Reporting under EMIR II & MiFiD II/ MiFiR : Challenges and Opportunities
Estimated Reading Time: 5 minutes
The incoming EMIR II and MiFiD II / MiFiR regulations from the European Union are causing headaches for financial compliance teams across the globe. MiFiD II covers a broader range of financial instruments than MiFiD I and thus the compliance costs will be higher. Indeed, The Financial Times have speculated that the cost of MiFiD II to the financial services industry could total more than $2 billion in 2017 alone. As a result, financial firms now find themselves scrambling to prepare for this vast new regulatory landscape as the clock ticks towards the implementation date of 3 January 2018.
On 2 March 2017, BearingPoint and RegTech21 came together with Marcus Evans Webinars to discuss the main challenges that this major regulatory overhaul represent to the industry, in addition to how well prepared the industry currently stands to meet their obligations and what the success factors are for a sustainable reporting infrastructure within a regulatory landscape that is constantly evolving.
On our panel we were delighted to have five leading experts on transaction reporting. Wouter van Bronswijk of the Dutch financial regulator AFM, Wouter works as a Data Analyst at the AFM and is primarily concerned with transaction reporting there; Wouter also co-wrote the Regulatory Technical Standard 22 of MiFiD II. Next was David Masters, Director of Operations Regulatory Reporting at Societe Generale. From Standard Chartered we had Chad Giussani, Chad is Head of Transaction Reporting and Operations Compliance for Standard Chartered and has been involved in transaction reporting for over 10 years. Rounding out the panel was BearingPoint’s Markus Stadtfeld who works as a Senior Consultant on their reporting infrastructure and solutions. Lastly, serving as our webinar moderator we had Stuart Clark, a regulatory partner at RegTech21 with a background in capital markets and technology companies.
To kick off the discussion Stuart Clark noted that the total fines issued for breaches in reporting under MiFiD I have totaled over $32 million, a staggering figure which really drives home the need for financial institutions to gain a thorough understanding of their obligations under the new MiFiD II directives, directives which are set to make the regulatory landscape only more complex.
Up for discussion first : what are the key changes taking place in the landscape of transaction-based reporting requirements in 2017? Chad Giussani led by declaring that the mandating of Legal Entity Identifiers (LEIs) represented a huge game changer for Europe. Under MiFiD II all legal entities that are subject to MiFiD II reporting must obtain an LEI for reporting purposes.
For Chad, the challenge for banks lies in persuading their clients outside of the G20 and G24 nations of the need to obtain LEIs which are costly to procure and to maintain. Chad argues that the onus will be on the banks to drive this change forwards, saying that “we as banks need to go out and talk to our clients and prep them to get these LEIs because without the client's support we’re very limited in what we can do for them”.
On the success factors for sustainable reporting infrastructure within the context of an ever-evolving regulatory landscape, BearingPoint ‘s Markus Stadtfeld argued that the mistake made by financial institutions in MiFiD I was to build solutions based around individual regulations as they came out, rather than around their trade and post-trade processes. Markus elaborates by stressing that successful transaction reporting solutions must be “efficient, adaptable and scalable”; efficient because of “timely reporting requirements” on banks, adaptable because “existing regulations are frequently under review” and scalable because “transaction-based reporting has increased so much in recent years and it will grow further”. Rounding out the topic discussion, Wouter stressed that getting the right reporting software solution is “critical” and that the ideal solution in his mind would be a “fully automated process and for the system to know when human intervention is required”.
When it came to industry readiness for MiFiD II, our panel had plenty to say. Stuart Clark cited surveys showing that up to 40% of buy-side firms have yet to formalise a MiFiD II plan, and yet our panelists did not believe that this necessarily represents a crisis. Today the market for transaction reporting solutions is vast and firms now have numerous vendors to choose from to whom they can outsource their reporting functions to. David Masters advocates for vendor-supplied solutions by noting that vendors now offer a “value-added service” which includes data checking, assistance with errors and reconciliation services. From a regulator’s perspective, Woulter recommends that firms keep things simple by either doing everything in-house or by leveraging a single vendor for reporting purposes.
Following the webinar discussion, Markus Stadtfeld provided an overview of the transaction reporting solutions on offer from BearingPoint and RegTech’s strategic partnership. With 18% of the largest Euro-area banking groups already on Bearing Point/RegTech solutions, including 2,500 firms on FiTax, over 800 on Abacus and 80 banks using EasyTax worldwide, BearingPoint is proving its value in helping firms meet their reporting obligations. In our webinar, Markus delivered a more in-depth look at Abacus/Transactions, BearingPoint’s standard solution for transaction-based reporting.
This Marcus Evans Webinar brought in over 500 registrants looking for expert analysis on the daunting challenges that the new MiFiD II/MiFiR and EMIR II changes will bring.
To see those participants’ questions answered by our panel, as well as the full breadth of analytical discussion that took place, please be sure to download the webinar for free below.
Download the webinar and the accompanying slides here:
Thomas Bannister
Intern
Marcus Evans
101 Finsbury Pavement,
London, EC2A 1RS
