Magic FinServ delves into the transition from the previous SEC T+2 Settlement Cycle to the current SEC T+1 Settlement Cycle and discusses its implications for investors and market participants. It highlights the advantages of the shorter settlement period, such as reduced risk and improved operational efficiency.

1. Keeping up with Sec T+1 Settlement Cycle!
Standardizing Broker to Regulatory Authority (SEC/FINRA) Communication with
DeepSight™
We trust you were able to read our first blog (Are you ready for Sec T+1 Settlement
reforms?) on the impending shift to T+1 settlement in the US, where we highlighted the
reasons why broker-dealers and clearing brokers must automate and standardize
communication related to trade. Here in this blog, we evaluate why regulatory filings must be
automated as well.
Once a trade has been executed, the broker-dealer is expected to update the regulatory body
as the case might be, with appropriate details related to the trade transaction. These reports or
regulatory filings are a comprehensive summary of the trade that is submitted to the
regulatory bodies on a timely basis. Regulatory filings involve trade status and timestamp
details for all the actions like Order Initiation, Execution, confirmation, affirmation,
matching, settlement, partially settle, rebook etc. In case there is a settlement failure or a
rebooking, the broker dealer is expected to update the regulatory authority on that as well.
The sole objective of this regulatory filing is to ensure transparency and to enable the
regulator to assess and supervise the business being transacted by individual Counterparties
within the marketplace. It is critical for protecting the interests of the investor and keeping the
integrity and the security of the capital markets intact.

2. Typical Challenges in Regulatory Filings
Provided below are some of the typical challenges that broker-dealers face in ensuring a
timely delivery of regulatory filings:
Operational Risk: Broker/dealers carry out trade lifecycle operations across multiple
platforms and FinTech systems, often relying on complex manual processes to bridge the gap
between these disparate platforms. However, they frequently face challenges due to outdated
legacy processes and system performance issues and most importantly Data transfer issues
due to Data compatibility, which hinder their ability to file regulatory reports in a timely
manner.
Asset challenges: Investment managers face challenges related to diverse Asset types,
including equity, fixed income securities, and ETD derivatives. Regulatory requirements for
each instrument depend on the market in which it is traded, such as Organized Trading
Facility (OTF) or Regulated Market (RM), as well as the specific guidelines set by regulatory
bodies like the SEC, FINRA, and CFTC. As a result, the regulatory filing process becomes
complex when broker-dealers do not automate or use a rule-based approach for FO-MO-BO
data reconciliation and transformation.
Data quality and governance challenges: Excessive reliance on manual labor only for the
classifying, aggregating, consolidating, and validating data during the multiple stages of the
trade – initiation, confirmation, affirmation, rebooking, settlement constitutes a problem
when it comes to meeting regulatory timelines or ensuring that all data is up-to-date and
accurate.
STP challenges: All broker-dealers are typically required to report trade details to the SEC
and other regulatory bodies in a timely manner. The reporting frequency and specific

3. deadlines for filing these reports can vary based on the size and activities of the broker-dealer.
In the absence of automation and STP, timely regulatory filings are difficult.
Finding the right vendor: Finding the right vendors for automating processes without
impacting the existing business activities might not be as easy as expected. And that's why
broker-dealers need a partner with a thorough understanding of the capital markets and are
capable of designing solutions that are tailored to fit.
Automating Regulatory Filing with Magic DeepSightTM : The 7-point advantage
Capitalizing on its immense experience in Capital and Financial Markets, and bespoke
AI/ML platform that customizes solutions as per need, Magic FinServ ensures that regulatory
filings are seamless and smoother than before - beginning with faster, smoother, aggregation
and consolidation of data (using automation) and benefiting from a rules-based approach that
adapts to evolving regulatory environment (including shift to T+1, and others) easily.

4. 1. Ensures data quality and governance: An AI-enabled platform like DeepSight can
make a huge difference in the quality of data. Instead of inaccurate, inconsistent, and
incomplete data, from manual data entry, broker-dealers are assured of clean,
complete, consistent, and accurate data, for submission to the SEC and other
regulatory bodies. DeepSight also validates and cross-references data, further
minimizing the likelihood of errors and discrepancies. Most importantly is also
creates an audit trail thereby enabling replaying of the transaction if needed.
2. Simplifying reconciliation/transformation of trade data: An AI/ML and
rules-based solution can ensure a faster, smoother, and more accurate reconciliation
and transformation of trade data emanating between the front, middle, and back office
when compared to the manual approach. This is most critical as the Data Models,
Formats and Templates differ for each application and area, a key reason why the
manual approach is simply not feasible for the impending T+1 settlement cycle.
3. Easy integration: DeepSight can be easily integrated with existing systems. It
supports data in all formats. The platform is format-agnostic and has the capability to
support all sorts of data formats such as Excel files and spreadsheets, CSV files,
emails and attached documents, API integration from multiple systems, and
unstructured data.
4. Shared database for data multi-purposing: Whatever the file format, DeepSight
parses through data seamlessly from disparate sources such as back office, middle
office, front office and processes, transforms, enriches it, and creates a single source
of truth in a shared location or database.
5. Enables timeliness and compliance: With DeepSight, broker-dealers can ensure that
regulatory filings are done as per the timelines set by the regulatory authority. By
automating the workflows, extracting the data from multiple sources (the back,
middle, and front offices) and compiling it together becomes easier.
6. Single solution: Straight through processing (STP) results in seamless and smoother
regulatory filing. This integration enables seamless data flow and enhances overall
workflow optimization. It reduces manual data transfer and improves the accuracy
and efficiency of the trade reporting process.
7. Adopt new regulatory changes easily with a rules-based approach: In an evolving
regulatory environment, a rules-based solution makes it easier to reconcile data and
file reports with the regulatory body becomes easier.
As the market gears up for T+1, this was how we could enable your transition to it. For more
you can write to us mail@magicfinserv.com.