The Lombard Risk REFORM for regulatory transaction reporting solution helps financial services firms meet Dodd-Frank Act (DFA) financial regulations, which will have a major impact on nearly every area, including compliance, operations, data management and risk management.
21st February 2012: PRESS RELEASE – Lombard Risk Dodd-Frank Act engine as solution for Title VII, Regulation of OTC Swaps markets: July 2012: CFTC and SEC deadlines for real-time reporting.
John Wisbey, Chief Executive Officer of Lombard Risk says: “As a result of our quality work and valued experience in the regulatory and collateral management areas with our U.S. clients, they turned to us as their solution provider to this new regulatory issue. We do not however see this as a U.S. problem only – European regulators are on the same track, with EMIR and MiFID2, expected to be operational towards the end of 2013, and our technology is designed with that in mind. The Dodd-Frank Act regulations affect are active in derivatives and, as the top supplier of regulatory reporting solutions to foreign banks in the U.S., we believe we are best placed to serve our clients’ needs.”
This Act is quite complex; high-level, some of the challenges that organizations will face include:
- Trade Creation Data must be sent “as soon as technologically practicable”, which may necessitate transmission of the data before the usual checking procedures have been completed
- The scope for error is increased further if deals executed on a Swap Execution Facility (SEF) have to be manually re-keyed into the system of record
- The mandatory data requirements of the Dodd-Frank Act span many different banking systems – it is not just trade data but MtMs, SSI data, CSAs, images of paper-based confirmations, etc
- Many of these systems may not have a programmatic interface, which may need to be created
- A source of MtM valuations will be required as the Dodd-Frank Act mandates that MtM valuations must be reported daily. Important decisions will need to be made regarding the mechanics of generating those values, e.g.:
- the time the MtMs should be generated
- the prices/market rates to use
- the system used to generate the MtMs
- Important decisions on an organization’s systems and future technology roadmap will be required
- The compliance dates are now very near and it is crucial that all organizations that will be affected by the DFA have their plans in place.
Lombard Risk’s REFORM solution has the following advantages:
- It is independent of any specific trading system or other banking system, which allows it to gather all the necessary data from many different source systems
- It can support reporting to a number of different Swap Data Repositories (SDRs)
- Optional functionality exists to allow trades executed on a SEF to be automatically loaded into the trade system of record
- Having a single system responsible for the formulation of Dodd-Frank reporting ensures a clean separation of functionality and means that only the Lombard Risk DFA Engine will need to change if regulations change
- It allows exceptions to be managed and resolved, and provides reporting on error rate, throughput and latency
- It uses a standard set of technologies that are widely used in the industry
- It is adaptable and fully configurable to accommodate future changes by the CFTC, SEC and other regimes