Impact 2013: How Technology is used for real-time monitoring of Dodd-Frank Trade Reporting
Upcoming SlideShare
Loading in...5
×
 

Impact 2013: How Technology is used for real-time monitoring of Dodd-Frank Trade Reporting

on

  • 450 views

Presentation delivered at IBM IMPACT 2013 ...

Presentation delivered at IBM IMPACT 2013
Dodd-Frank Trade Reporting regulations were enacted to ensure improved transparency and accountability for trade execution and reporting. However, there are key challenges such as: how do swap dealers ensure compliance and how can this be done in real-time as the windows for course correction are small.
-Real-time trade surveillance across the lifecycle of a reportable trade
- NACK Management
- How to provide visibility in real-time to actual or potential breaches in responsibility with the flexibility to change as the regulation evolves
- See the video at: http://www.nastel.com/dodd-frank-webinar.html

Statistics

Views

Total Views
450
Views on SlideShare
450
Embed Views
0

Actions

Likes
0
Downloads
9
Comments
0

0 Embeds 0

No embeds

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Impact 2013: How Technology is used for real-time monitoring of Dodd-Frank Trade Reporting Impact 2013: How Technology is used for real-time monitoring of Dodd-Frank Trade Reporting Presentation Transcript

  • How Technology is used for real-time monitoring of Dodd-Frank Trade Reporting
  • Table of Contents • Regulation, Regulation and more Regulation • G20 Obligations • Trade Reporting Compliance 2
  • Regulation Regulation is causing business to change how Information Technology (IT) is used Transparency Accuracy Accountability But, like “faster, better, cheaper” can you have all three? • Worldwide • Dodd-Frank in the US • EMIR in EMEA • Timelines are aggressive • Not going so well… • The search for clarity • Very complex especially as activities span regulatory bodies • Lots of folks with hair on fire, but not sure what to do to even start… 3
  • G20 Obligations
  • G20 Obligations – Who are they? Group of Twenty (G20) • Established in September 1999 • Finance ministers and central bank governors of seven major industrial countries (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States) met in Washington, D.C. in the aftermath of the financial crisis of 1997-1998 • Discussed vulnerability of the international financial system in context of economic globalization and showed that key developing countries were insufficiently involved in discussions and decisions concerning global economic issues. 5
  • G20 Obligations – Objectives Objectives: 1. Policy coordination between its members in order to achieve global economic stability, sustainable growth; 2. Promoting financial regulations that reduce risks and prevent future financial calamities 3. Modernizing international financial architecture. They are committed to reforming domestic and international rules governing the over-the-counter (OTC) derivatives markets. 6
  • G20 Obligations - Regulators 7 Multiple Regulatory Bodies: USA – CFTC, SEC Japan JFSA Singapore – MAS Hong Kong – HKMA EU – EMIR Australia – APRA Canada – CSA Canadian Securities Administrators
  • Architecture 8 Fast moving Real-time response necessary as time for course correction is brief. Complex Lots of asset classes and products. Regulation doesn’t specify how to implement it—lots or room for interpretation (errors). You are accountable Penalties for non-compliance not yet defined…consequences unclear as of yet…
  • G20 Obligations – Example of “Business in Motion” 4 themes associated with regulation Theme Impact on Business Impact on Technology Market Transparency Bi-lateral OTC trading relationships migrate to electronic Spreads tighten as prices become more competitive Trade volumes expected to increase Introduction of Trade Reporting resulted in vast data volumes Increased visibility required by Compliance department Systemic Risk Capital, clearing and margin requirements increase costs Connectivity and aggregation of data from multiple locations Regulatory Complexity Landscape complexity continues to evolve with more jurisdictions coming into force (globally) Strict regulatory enforcement program Data Sourcing / Data Quality Rules-based approach Straight Through Processing Regulation driving more efficiency in business model Systems move from batch to real- time (Intraday pricing and valuation) ASATP – reporting windows reduced over time 9
  • Trade Compliance – Responsibilities what do you have to do? The three “R”s (no, not readin’, ritin’ & ‘rithmatic…) Real time monitoring of trading activities Ensure that the firm complies with regulatory obligations Follow up on reporting errors, false positives Reconcile position across all legal entities Reporting and dissemination Prevent over/under/misreporting Respond to any requests for information from regulators Identify areas for improvement Issues that impairs operations, trading or other critical functions 10
  • Trade Compliance
  • Architecture 12
  • AutoPilot® Monitors Trade Compliance Typical AutoPilot deployment 13
  • Regulation is challenging…even for the regulators CFTC can’t cope with SDR Data (--SingleDealerPlatforms.org) • They told the industry “what” to send…but not what nomenclature to use…thus they are all different and the CFTC can’t read it • Even when the market participants send the correct data to the SDRs, the data recorded for transparency…isn’t… • So, reporting isn’t usable...the problem get’s even worse when MSPs begin reporting 14
  • Trade Compliance – Market Transparency Market Transparency: • Only achieved if data can be interpreted as meaningful information • Essential that quality of data being reported is accurate • Issues must be identified immediately Examples: • Trades not yet ACKed or NACKed • EOD Valuations not generated 15
  • Trade Compliance – Systemic Risk Systemic Risk: • Some Swaps now subject to clearing and margin requirements (reducing risk but creating more complexity) • CME Rule 1001 – some clear to DTCC and some to CME – eliminates choice • End User Exemption Examples: • Multiple SDRs, • Break out entities : SDs, Non SD, MSP 16
  • Trade Compliance – Systemic Risk Systemic Risk: • Some Swaps now subject to clearing and margin requirements (reducing risk but creating more complexity) • CME Rule 1001 – some clear to DTCC and some to CME – eliminates choice • End User Exemption Examples: • Multiple SDRs, • Break out entities : SDs, Non SD, MSP 17
  • Trade Compliance – Systemic Risk Systemic Risk: • Some Swaps now subject to clearing and margin requirements (reducing risk but creating more complexity) • CME Rule 1001 – some clear to DTCC and some to CME – eliminates choice • End User Exemption Examples: • Multiple SDRs, • Break out entities : SDs, Non SD, MSP 18
  • Trade Compliance – Regulatory Complexity Regulatory Complexity: • Different regulators have different focus CFTC vs. EMIR • Multiple reporting windows defined for the same trade Examples: • Multiple Jurisdictions • Time and event-based SLAs – relative or absolute & whether calendar applies, holiday calendars… 19
  • Trade Compliance – STP Straight Through Processing:T+1 get everything done asap and identify bottlenecks Examples: Look for slowest trades / parts of the flow 20
  • Trade Compliance – STP Straight Through Processing:T+1 get everything done asap and identify bottlenecks Examples: Look for slowest trades / parts of the flow 21
  • Trade Compliance – STP Straight Through Processing:T+1 get everything done asap and identify bottlenecks Examples: Look for slowest trades / parts of the flow 22
  • Are You Compliant With Dodd-Frank Trade Reporting?
  • What is Dodd-Frank?
  • What is Dodd-Frank? A series of regulations that include Improved Transparency and Accountability for Trade Execution and Reporting 25
  • What is Dodd-Frank? A series of regulations that include Improved Transparency and Accountability for Trade Execution and Reporting Our focus: Real-time Trade Reporting (Title VII) Regulators require all swaps (subject to mandatory clearing requirements) to be reported “as soon as technologically practicable” Real-time (RT) and confirmation messages to be reported to the SDR within 30 minutes of execution. Primary Economic Terms (PET) must also be reported by EOD Rejected trade messages will need to be resubmitted within the original 30 minute deadline when the trade was first reported 26
  • What is Dodd-Frank? A series of regulations that include Improved Transparency and Accountability for Trade Execution and Reporting Our focus: Real-time Trade Reporting (Title VII) Regulators require all swaps (subject to mandatory clearing requirements) to be reported “as soon as technologically practicable” Real-time (RT) and confirmation messages to be reported to the SDR within 30 minutes of execution. Primary Economic Terms (PET) must also be reported by EOD Rejected trade messages will need to be resubmitted within the original 30 minute deadline when the trade was first reported Key challenges How do swap dealers ensure compliance? And accomplish this with real-time visibility and the flexibility to course correct when necessary as the regulation evolves 27
  • Scenario
  • Scenario: Capital Markets Group in a Major Bank 29 Business Requirements Ensure compliance to Dodd Frank Trade Reporting regulation. Covers interest rates, credit equities, commodities and FX derivative products. Provide end-to-end visibility to reporting activities. Provide visibility in real-time to actual or potential breaches in responsibility
  • Scenario: Capital Markets Group in a Major Bank 30 IT Environment Heterogeneous: Distributed, mainframe, integration technologies such as MQ and TIBCO, development languages such as Java, multiple trading packages such as Wallstreet, Murex, Calypso… In real-time monitor the lifecycle of a trade. Provide a single tool for monitoring all middleware tools & consume events from any existing monitoring tools. Business Requirements Ensure compliance to Dodd Frank Trade Reporting regulation. Covers interest rates, credit equities, commodities and FX derivative products. Provide end-to-end visibility to reporting activities. Provide visibility in real-time to actual or potential breaches in responsibility
  • The Users Monitoring Dodd-Frank Trade Reporting Real-time monitoring of trade reporting issues. When a NACK is received, act to correct the issue: 31 Business Roles Function Trader Execution time correct?…based on economic term agreement… Trade Support Transactions that took greater than a specified time to achieve a milestone Is there a unique swap indicator (USI) CounterParty issue? Technology Are all trades acknowledged by DTCC? Compliance Was there “Double Reporting”? Many more…
  • AutoPilot® Competitive Advantage
  • AutoPilot® Monitors IT Infrastructure Typical AutoPilot deployment: monitoring infrastructure 33 CFTC’s O’Malia calls for savvier Technological surveillance – 2.25.13
  • 34 AutoPilot® Auto-discovers Message Flow This is the Enterprise Nervous System These messages may be in different formats. Essential to track these in real time in order to ensure compliance.
  • 35 AutoPilot® Uses Payload to help Stitch Tracking messages From the outside by matching their message signatures. Inside by reading the payload.
  • 36 Reportable Trading Events Correlated in Real-time Automatically correlated in real-time Providing you with enough time to do something about the issue.
  • AutoPilot Monitors Trade Reporting in Real-time Requirements AutoPilot Features Monitor compliance to regulatory reporting requirements • Real-time trade surveillance of the progress a trade is making until completion • Automated transaction stitching across the entire lifecycle of a reportable trade event, represented graphically as a series of milestones. • User can be alerted to a potential or actual breach in responsibilities in real-time.
  • AutoPilot Monitors Trade Reporting in Real-time Execution Time Tracking Defined as when the primary economic terms are exchanged • Retrieves message content and extracts the actual Execution Time as the trigger for the SLA timer rather than the time stamp for when it was generated electronically Requirements AutoPilot Features Monitor compliance to regulatory reporting requirements • Real-time trade surveillance of the progress a trade is making until completion • Automated transaction stitching across the entire lifecycle of a reportable trade event, represented graphically as a series of milestones. • User can be alerted to a potential or actual breach in responsibilities in real-time.
  • AutoPilot Monitors Trade Reporting in Real-time Execution Time Tracking Defined as when the primary economic terms are exchanged • Retrieves message content and extracts the actual Execution Time as the trigger for the SLA timer rather than the time stamp for when it was generated electronically NACK Management • Automatically detects all trades that do not contain a valid ACK milestone event. Requirements AutoPilot Features Monitor compliance to regulatory reporting requirements • Real-time trade surveillance of the progress a trade is making until completion • Automated transaction stitching across the entire lifecycle of a reportable trade event, represented graphically as a series of milestones. • User can be alerted to a potential or actual breach in responsibilities in real-time.
  • AutoPilot Monitors Trade Reporting in Real-time Execution Time Tracking Defined as when the primary economic terms are exchanged • Retrieves message content and extracts the actual Execution Time as the trigger for the SLA timer rather than the time stamp for when it was generated electronically NACK Management • Automatically detects all trades that do not contain a valid ACK milestone event. Part 43 Real-time reporting requires the management of timestamps by swap dealers and major swap participants • Native support for Middleware and a heterogeneous deployment including both distributed and mainframe which seamlessly integrates into the trade flow and contributes timestamps to the transaction stitching process. Requirements AutoPilot Features Monitor compliance to regulatory reporting requirements • Real-time trade surveillance of the progress a trade is making until completion • Automated transaction stitching across the entire lifecycle of a reportable trade event, represented graphically as a series of milestones. • User can be alerted to a potential or actual breach in responsibilities in real-time.
  • AutoPilot Monitors Trade Reporting in Real-time Execution Time Tracking Defined as when the primary economic terms are exchanged • Retrieves message content and extracts the actual Execution Time as the trigger for the SLA timer rather than the time stamp for when it was generated electronically NACK Management • Automatically detects all trades that do not contain a valid ACK milestone event. Part 43 Real-time reporting requires the management of timestamps by swap dealers and major swap participants • Native support for Middleware and a heterogeneous deployment including both distributed and mainframe which seamlessly integrates into the trade flow and contributes timestamps to the transaction stitching process. Monitor Mandatory Data • The user can view the transaction at any point in the flow and define conditional rules to check against the data in real-time for immediate notification. Requirements AutoPilot Features Monitor compliance to regulatory reporting requirements • Real-time trade surveillance of the progress a trade is making until completion • Automated transaction stitching across the entire lifecycle of a reportable trade event, represented graphically as a series of milestones. • User can be alerted to a potential or actual breach in responsibilities in real-time.
  • AutoPilot Monitors Trade Reporting in Real-time Execution Time Tracking Defined as when the primary economic terms are exchanged • Retrieves message content and extracts the actual Execution Time as the trigger for the SLA timer rather than the time stamp for when it was generated electronically NACK Management • Automatically detects all trades that do not contain a valid ACK milestone event. Part 43 Real-time reporting requires the management of timestamps by swap dealers and major swap participants • Native support for Middleware and a heterogeneous deployment including both distributed and mainframe which seamlessly integrates into the trade flow and contributes timestamps to the transaction stitching process. Monitor Mandatory Data • The user can view the transaction at any point in the flow and define conditional rules to check against the data in real-time for immediate notification. Reporting Window • An advanced SLA capability that can track each reportable event against the appropriate time-based (30 minutes after execution) or event-based (by 04:00 T+1 after confirmation date) window. The SLA also incorporates holiday calendars and UTC timestamps. Advanced Calendars. Requirements AutoPilot Features Monitor compliance to regulatory reporting requirements • Real-time trade surveillance of the progress a trade is making until completion • Automated transaction stitching across the entire lifecycle of a reportable trade event, represented graphically as a series of milestones. • User can be alerted to a potential or actual breach in responsibilities in real-time.
  • AutoPilot Monitors Trade Reporting in Real-time Execution Time Tracking Defined as when the primary economic terms are exchanged • Retrieves message content and extracts the actual Execution Time as the trigger for the SLA timer rather than the time stamp for when it was generated electronically NACK Management • Automatically detects all trades that do not contain a valid ACK milestone event. Part 43 Real-time reporting requires the management of timestamps by swap dealers and major swap participants • Native support for Middleware and a heterogeneous deployment including both distributed and mainframe which seamlessly integrates into the trade flow and contributes timestamps to the transaction stitching process. Monitor Mandatory Data • The user can view the transaction at any point in the flow and define conditional rules to check against the data in real-time for immediate notification. Reporting Window • An advanced SLA capability that can track each reportable event against the appropriate time-based (30 minutes after execution) or event-based (by 04:00 T+1 after confirmation date) window. The SLA also incorporates holiday calendars and UTC timestamps. Advanced Calendars. Reconciliation • Reporting capability that enable DTCC submissions and position reports to be automatically reconciled against the application monitoring data that has been gathered at the end of the business day. Reconciliation reports can identify discrepancies between what the firm has reported and what information has been received by the GTR. Requirements AutoPilot Features Monitor compliance to regulatory reporting requirements • Real-time trade surveillance of the progress a trade is making until completion • Automated transaction stitching across the entire lifecycle of a reportable trade event, represented graphically as a series of milestones. • User can be alerted to a potential or actual breach in responsibilities in real-time.
  • Dashboard: Trade Summary Chart View Trade Status Failed Drill into chart for details 44 In Progress Completed Missed SLA Failed
  • Dashboard: Review Trade Details 45 1. Review trades in progress over a time interval
  • Dashboard: Select Trade 46 2. Select a trade to get more detail on
  • Dashboard: View Timeline 47 3. View trade timeline
  • Dashboard: View Milestones 48 4. View milestones
  • Last 1 HourLast 1 Hour 08/12/2012 12:0708/12/2012 12:07Last 1 Hour 08/12/2012 12:07 Search: Trade Visibility for the Business Search by an combination of fields in the transaction USI, execution time, source system, USI, Asset Class, Trade ID, status, asset class, Counterparty USI, Correlation ID… Search for all transactions that took more than 15 minutes to complete 49
  • Search for Trades with a Specific USI Search for a trade with a specific USI 50 Last 1 HourLast 1 Hour 08/12/2012 12:0708/12/2012 12:07Last 1 Hour 08/12/2012 12:07
  • Search for a Trade with Multiple Conditions Find trades with a blank USI where ACME is not the Reporting CounterParty 51 Last 1 HourLast 1 Hour 02/12/2013 11:0702/12/2013 11:07Last 1 Hour 02/12/2013 11:07
  • Find Trades without NACKS All trades that received a NACK in the last 24 hours 52 Last 1 HourLast 1 Hour 02/12/2013 11:0702/12/2013 11:07Last 1 Hour 02/12/2013 11:07
  • Find Trades without ACKs All trades in progress that have not received an ACK 53 Last 1 HourLast 1 Hour 02/12/2013 11:0702/12/2013 11:07Last 1 Hour 02/12/2013 11:07
  • Why Nastel AutoPilot®
  • Conclusion AutoPilot® helps ensure compliance It can provide the answer to the question, “Are you compliant?” Detects the reasons that explain why you are not compliant Detects the reasons that explain why you won’t be… Two questions you need to ask yourself 1. Are you providing real-time monitoring of the end-to-end trade? 2. Can you respond to an issue in enough time to remain compliant? (NACK, no response, missed SLA…) 55
  • Nastel AutoPilot® Provides Visibility 56 Feature Benefit Web-based Dashboard Available anywhere including mobile devices enables immediate visibility and response with support for LDAP authentication Simple, Proactive Analytics Real-time analytics using CEP enables users to instantly see transactions of concern such as those with NACKs from DTCC, Euroclear or Clearstream in order to rapidly correct and resubmit them Correlation Automating, end-to-end stitching together of the components within a trade, e.g. exe time, capture, xform, DTCC, NACK, ACK… Visibility Provides a view into compliance that is usable by the business, tracking: over 50 unique transaction details including: execution time, source system, USI, Asset Class , Trade ID, status, asset class, Counterparty USI, Correlation ID and more Charting User defined charts for visualization of user queries SLA reporting Supports both time based as well as deadline based SLAs Calendars Automatic accommodation of holidays helps keep system maintenance low. This lets analysis adjust to local policies an important capability in a function that is distributed globally. (Utilizes Google Calendars) History A repository searchable by USI, message contents, transaction ID or any other captured field Auditing All actions carried out are logged, associated to a user helping ensure accountability Reporting Pre-built EOD reports and Policy statistics enable effective program evaluation
  • Why Customers Chose Nastel Best-of-Breed Middleware management solution We are the experts—19 years of best practices built-in Single architecture across all middleware, distributed and mainframe: MQ family, DataPower, TIBCO & Solace Monitor Web Services in real-time 57
  • Why Customers Chose Nastel Best-of-Breed Middleware management solution We are the experts—19 years of best practices built-in Single architecture across all middleware, distributed and mainframe: MQ family, DataPower, TIBCO & Solace Monitor Web Services in real-time Analytics Transaction stitching or correlation Detect problems before there is impact • Reduces ticket backlog, support costs and raises customer satisfaction • End “eyes-on-screen monitoring” • Solve the problem of too much data complexity – old-school analytics just can’t get it done 58
  • Why Customers Chose Nastel Best-of-Breed Middleware management solution We are the experts—19 years of best practices built-in Single architecture across all middleware, distributed and mainframe: MQ family, DataPower, TIBCO & Solace Monitor Web Services in real-time Analytics Transaction stitching or correlation Detect problems before there is impact • Reduces ticket backlog, support costs and raises customer satisfaction • End “eyes-on-screen monitoring” • Solve the problem of too much data complexity – old-school analytics just can’t get it done Track record with Financial Services Citi, DTCC, TD, Barclays, Credit Suisse and more… 59
  • Our Customers
  • Over 200 companies rely on Nastel since 1994 61
  • w w w . n a s t e l . c o m Contact us: Web nastel.com Twitter @nastel Facebook facebook.com/NastelTechnologies Email info@nastel.com Phone 1.800.580.2344