A compact solution for transaction-based reporting
Banks, investment firms, asset managers and other financial institutions have to comply with a number of transaction-based regulatory regimes, such as the European Market Infrastructure Regulation (EMIR), the Money Market Statistical Reporting (MMSR) Regulation, the Markets in Financial Instruments Directive II/Regulation (MiFID II/MiFIR) and the Securities Financing Transactions Regulation (SFTR).
The scope of individual reporting regimes varies. Overlaps in the financial products and lifecycle events to be reported under each regime have a high potential for synergies, while differences create complexity. Identifying the relevant transactions for each reporting obligation is thus among the key challenges for reporting institutions. In light of additional upcoming transaction reporting obligations and continuous amendments to the existing ones, it is essential to think strategically and gain a holistic view of all relevant regulations. A high level of efficiency and automation is another crucial success factor for the daily submission of transaction reports.
To address these concerns as efficiently as possible, we have developed ABACUS/Transactions, a standard software solution specifically designed to meet the requirements of transaction-based regulatory reporting.
ABACUS/Transactions is an established standard software solution for transaction-based reporting that is designed to help reporting agents meet the requirements for several types of transaction reporting within one application.
ABACUS/Transactions consists of several reporting modules that cover different regulatory frameworks. Each module can be used separately or in any type of combination with other modules. ABACUS/Transactions thus provides scalability, helps to reduce development, maintenance and application management efforts, and speeds up the implementation process.
The product flexibly connects to multiple source systems and offers a high level of efficiency and automation, thus facilitating timely report submissions on a daily basis while offering enhanced data quality and consistency as well as error reduction.
Finally, our long-standing expertise in regulatory reporting and continuous dialogue with regulators enable us to quickly react to regulatory changes and provide our clients with the necessary software adjustments.
Transaction-based reporting is a matter of efficiency. ABACUS/Transactions helps reporting institutions to transform complexity into efficiency by using a harmonized data model and standardized processes to create synergy between different reporting schemes.
Alexander Becht, Product Manager for ABACUS/Transactions, BearingPoint / January 2019
The EMIR (European Market Infrastructure Regulation) requires institutions to report any conclusion, modification or termination of a derivative contract to an authorized trade repository by the end of the following business day. This applies regardless of whether the contract was traded on the stock exchange or over the counter. ABACUS/Transactions has been used for the generation of EMIR reports and their submission to the REGIS-TR and DTCC trade repositories since 2014.
The EU regulation concerning statistics on money markets (MMSR) aims to retrieve information about the money market activities and conditions in the European Monetary Union. To adhere to this provision, the ECB has been gathering statistical data on money market trades in Euros since April 2016. MMSR is a daily reporting obligation that applies throughout the Eurozone. Transaction-based reports must be submitted to the ECB or to the national central bank on the business day following the trade day. ABACUS/Transactions helps institutions create and submit reports across countries within the rigid time limits set by the regulators.
The revised Markets in Financial Instruments Directive (MiFID II) and the accompanying regulation (Markets in Financial Instruments Regulation, MiFIR) define the rules for the delivery of services related to securities for a variety of financial instruments in regulated, multilateral and organized trading venues. Pursuant to MiFIR Article 26, investment firms and trading venue operators are obliged to report all changes to their or their customers’ positions in certain financial instruments to the relevant authority by the end of the business day following the transaction day as of January 3, 2018. ABACUS/Transactions facilitates the generation of individual and group reports and their submission to the respective NCA either directly or via a so-called Approved Reporting Mechanism (ARM), such as Deutsche Börse Group.
The revised Markets in Financial Instruments Directive (MiFID II) and the accompanying regulation extend the applicable transparency guidelines under MiFID I and aim to stabilize and realign the financial market infrastructure. MiFID II and MiFIR have been applicable since January 3, 2018. Article 58 of MiFID II sets the provisions on the reporting of positions in commodity derivatives by investment firms trading commodity derivatives, emission allowances or derivatives thereof, as well as by operators of trading venues on which these financial instruments are traded. ABACUS/Transactions not only covers the position reporting to the Regulatory Reporting Hub of the Deutsche Börse Group, but also the reporting of exchange-traded contracts to the respective trading venues as well as position reporting to national competent authorities.
The Securities Financing Transactions Regulation (SFTR) regulates the reporting obligations for securities financing transactions (SFTs). Following a similar reporting logic as EMIR, SFTR stipulates that any conclusion, modification or termination of any SFT must be reported to an authorized trade repository by the end of the following business day. The reporting requirements were published by ESMA in the form of technical standards that are expected to come into force in the first half-year of 2019 and will gradually become applicable for the various counterparties in 2020. ABACUS/Transactions supports the generation of SFTR reports and their submission to the REGIS-TR and DTCC trade repositories as well as to the Regulatory Reporting Hub (RRH) of Deutsche Börse Group for both individual institutions and groups.
The Swiss Financial Market Infrastructure Act (FMIA/FinfraG) was developed by the Swiss Federal Department of Finance and has been applicable since October 1, 2017. This regulation closely resembles EMIR, stipulating several reporting obligations for market participants, including the fundamental requirement to report all derivatives to a trade repository. ABACUS/Transactions facilitates the reporting of derivatives in accordance with the FMIA/FinfraG regulation for all counterparty classes reporting to the REGIS-TR trade repository.
The Canadian Securities Administrators TR Rules were introduced based on the provisions to establish a new regulatory regime for the OTC derivatives market in Canada resulting from the G20 Summit. The CSA framework aims to provide a “national system of harmonized securities regulation, policy and practice”. The required reports are submitted unilaterally to a trade repository (TR). ABACUS/Transactions supports CSA reporting to the DTCC trade repository for smaller market participants.
The development of ABACUS/Transactions is based on 20 years of experience in the area of regulatory reporting software. Large, mediumand small financial institutions across Europe use the solution to meet their daily transaction reporting obligations.
ABACUS/Transactions has been in use for EMIR reporting since 2014 and has further proven itself in practice with the go-live of Money Market Statistical Reporting (MMSR): Over 15% of all reporting institutions in the Eurozone have been delivering MMSR reports with our solution since July 2016.
Another important milestone was the timely integration of the revised EMIR standards (so-called “EMIR II”), which have been applicable since November 1, 2017, followed by the launch of MiFID II/MiFIR. Our clients confirm that they have been successfully delivering their productive MiFID II/MiFIR reports on a daily basis since the initial reporting date on January 3, 2018. Furthermore, the product has been enhanced to cover SFTR reporting, which is expected go live in Q2 2020.
We will remain in direct contact and continue our consultations with regulators to stay on top of regulatory changes and further develop our ABACUS/Transactions solution accordingly.
ABACUS/Transactions is based on a harmonized data model shared across different regulations. The software’s layer structure allows our clients to activate and manage the modules for the various types of transaction reporting as needed.
The processing steps in the ABACUS/Transactions modules are standardized, thus offering high recognition value and maximum usability. The relevant data from the bank’s front and back office systems is delivered to ABACUS/Transactions via defined standard interfaces, which allows for connection to various source systems. The delivered transactions and positions are independently processed in the various ABACUS/Transactions modules. Therefore, the respective module relevance is evaluated for each data set. ABACUS/Transactions not only decides which transactions are valid for which regulation, but it also applies relevant validations from the regulators and report receivers (e.g. ESMA Level II validations from ESMA, DTCC and REGIS-TR, and XSD scheme and Data Quality Checks from ECB and Deutsche Bundesbank). The complete range of reporting logic has been included in the calculation process and can be run automatically.
The TR2 module covers the reporting requirements according to EMIR, FMIA/FinfraG (Swiss derivatives reporting) and CSA (Canadian Securities Administrators TR Rules).
The MMSR module helps clients to comply with the ECB regulation concerning Money Markets Statistical Reporting.
The MIFIR module supports transaction reporting under Article 26 MiFIR as well as commodity derivates position reporting under Article 58 of MiFID II.
The SFTR module will help reporting institutions comply with Article 4 of the new Securities Financing Transactions Regulation.
In addition to the generation of reports, ABACUS/Transactions supports related functionalities such as module relevance checks, consistency checks, the identification of report-relevant transactions, internal portfolio reconciliation, the validation of results data according to the rules from the report recipient, an audit-proof correction process (for consistency errors, for example), the import and export of tables (xml, csv/xlsx) as well as analytical reporting.
The Internal Portfolio Reconciliation, including the delivery of proposed transactions and the identification of non-relevant transactions, facilitates a traceable report submission while ensuring consistency and coordinated control of the data across systems. The processes can be managed flexibly either via the cockpit (GUI), the process menu or automatically via batch scripts.
Finally, in order to meet the ever-increasing demand for security and data protection, ABACUS/Transactions provides not only a comprehensive user and role-based access management concept, but also a high degree of audit-compliance by logging any data changes in the audit trail (“Change log”).
The modern, future-proof system architecture of ABACUS/Transactions allows us to implement new business or technology requirements quickly and easily.
ABACUS/Transactions is based on BearingPoint’s proven Abacus platform. The main components are its flexible client-server architecture (3-tier architecture) and a relational database. The product works independently and provides multi-client capability, thus offering an appropriate solution for both small and large institutions.
ABACUS/Transactions is based on a highly extensible Java and web-based client-server architecture, a relational database system, and standard interfaces. This optimized IT infrastructure makes ABACUS/Transactions a platform-independent, multi-tenant and scalable software that can be easily adapted or enhanced, both technically and functionally, and smoothly integrated into complex system landscapes.
ABACUS/Transactions is available as an on-premise solution as well as SaaS (software as a service), which allows customers to further reduce the IT development costs and deployment effort.
With the ABACUS/Transactions MIFIR module, we provide asset managers with a user-friendly solution to submit their MiFIR reports to the FMA on a daily basis in a largely automated manner. BearingPoint has proven itself to be a competent solution provider, whose software helps us to offer our customers a comprehensive service and to facilitate their compliance with current regulatory requirements.
Tino Kesseli, Head of IT at CSL Corporate Services / November 2018, Press release
In 2017, BNG Bank prepared the implementation of all MiFID II/MiFIR requirements which resulted in a successful go-live on January 3 and 4, 2018. BNG Bank uses ABACUS/Transactions as its reporting tool for the daily transaction reports to the supervisor AFM
Susaan Ghajar, Project Manager at BNG Bank / May 2018, Press release
Due to MiFIR complexity and a tight deadline, we had to find a software provider that could not only demonstrate profound expertise in transaction reporting but also implement its solution within a very short timeframe. Therefore, we have opted for BearingPoint with its proven track record in regulatory reporting. The result exceeded our expectations: BearingPoint’s Abacus solution was deployed within just a few weeks after our initial meeting. As a result, we have been successfully submitting our daily reports under MiFIR since its launch.
Holger Englert, Chief Executive Officer at PASS Banking Solutions / May 2018, Press release
Based on our positive experience with ABACUS/Transactions for EMIR and MMSR reporting, we decided to use it also for MiFIR and MiFID II commodity derivatives reporting. It is very beneficial for us to have one solution which covers several types of transaction reporting – it reduces development and deployment costs, saves us time in implementation and training, and contributes to data harmonization. The decision to use ABACUS/Transactions for the implementation of MiFID II/MiFIR reporting proved to be a great success for us.
Bernd Großmann, Head of Department Backoffice FM, and Helmut Kutschera, Head of Department IT Application Management at Landesbank Baden-Wuerttemberg / May 2018, Press release
As an important player in the financial market, we need to meet the whole range of transaction-based reporting requirements. With ABACUS/Transactions, we have found a software which can be used for various reporting types. This is time-saving, cost-effective, and will make our work much easier in the future, since we have to prepare and deliver the data only once
Fariborz Nourani, Head of Division Head Office Operations at Raiffeisen Bank International / January 2018, Press release
Let me congratulate BearingPoint on reaching our goal in the implementation of Abacus Money Market application in Santander Bank. It was accomplished in record breaking time, not only in meeting our goal but in surpassing it.” Over 15% of the reporting institutions in the Eurozone deliver MMSR reports with our solution.
Jose Álvarez, CEO of Isban (Santander) / June 2017, Case Study