Duco has won the award for Best Transaction Reporting Solution in A-Team Group’s RegTech Insight Awards Europe 2024. These annual awards recognise both established providers and innovative newcomers offering RegTech solutions that are successfully improving firms’ ability to respond effectively to evolving and ever more complex regulatory requirements across the global financial services industry.
Duco’s transaction reporting solution was selected as a RegTech Insight award winner by A-Team Group’s independent, expert advisory board in collaboration with its editorial team.
Steve Walsh, Director, Product and Solutions at Duco, explains why and how the company’s award-winning transaction reporting solution was developed and the benefits it can deliver.
A-Team: Please tell us about Duco’s transaction reporting business and the types of capital markets clients the company works with
Steve: Duco has been helping global and regional banks, asset managers, hedge funds and broker dealers with their regulatory challenges for nearly 10 years. Our clients have faced a tremendous amount of change recently, with global regulators updating reporting requirements. Duco has responded by developing new capabilities to help clients keep up with the increasing demands on data quality and controls.
A-Team: What challenges are your clients facing in this space at the moment?
Steve: Regulatory rewrites (CFTC, MAS, ASIC) and refits (EMIR) are introducing significant data complexity, new formats (e.g. ISO XML) and new data fields, leaving firms to manage competing requirements. Regulators are focusing even more on the accuracy and completeness of data, as well as over- and under-reporting. So, you’ve got to get more data, from systems that are getting more complex, and you’ve got to do it under tighter deadlines in many cases. Add in the fact that transaction reporting has historically relied upon data and systems that weren’t built to do that. All these factors can make delivering accurate and timely data difficult. In fact, some industry tests have shown that 57% of all trades have at least one error when they are reported to the trading repository (TR).
The key challenges are ensuring that:
- Firms are reporting the right transactions
- The data is complete and meets requirements
- Mismatches between reporting and upstream data processes are corrected quickly to ensure they are not repeated.
Regulators are looking for open dialogues with national competent authorities whenever issues arise as well. All of this means firms must have a good handle on their data, their processes, and the tools they use to ensure compliance – more so than ever before.
A-Team: How does Duco help customers address these challenges?
Steve: We’ve combined the knowledge we’ve gained helping clients effectively manage regulatory change with our extensive reconciliation experience to create our EMIR Refit solution, preconfigured to ISO XML format and maintained by Duco. Clients no longer need to run large, expensive projects to manage regulatory reconciliations. They can be up and running in a matter of days with our unique, out-of-the-box solution.
The solution can be used for upstream data or as a post-reporting control to demonstrate a focus on reporting accuracy. It leverages Duco’s market-leading reconciliation platform with no-code Natural Rule Language, automated exception management workflows and best-in-class match rates, giving customers an easy-to-use solution for complex reporting. In addition to auth.30 trade and margin reports, users can incorporate auth.091 DTCC pairing/matching reports to confirm match transaction status in one reconciliation.
Duco has also partnered with regulatory experts Quorsus, part of CapGemini, to deliver a TR eligibility validator, which provides an independent validation of internal eligibility rules against existing ESMA eligibility criteria. We believe it’s the only solution on the market that shows clients not just whether or not a trade is eligible, but which criteria are causing issues and why, providing actionable insight in a matter of minutes.
A-Team: Please tell us why and how Duco developed its award-winning transaction reporting solution
Steve: Through numerous discovery sessions, we uncovered that clients needed post-reporting controls to ensure their reporting was accurate and complete, and that any errors that do occur were addressed upstream to prevent them repeating. Our reconciliation capabilities were a natural fit.
We developed a preconfigured template mapped to the ISO XML reporting format for EMIR to ensure that all fields were represented correctly and that clients could easily map their data – both from the trade repository as well as internal systems – and complete now mandatory reconciliations on reported data. In addition, we recognised that eligibility – i.e. ‘did I report the correct transactions?’ – was going to be a huge issue. So we partnered with regulatory experts Quorsus to develop eligibility checks. What was vital was that clients could see the calls made and link them back to rules.
Breaks are managed through Duco’s exception management workflow, with results showing at a field level, and for each field users can see which rule is being applied and why it is being interpreted as it is. Other tools take a more black box approach, leaving clients to undertake complex investigations into why breaks are happening.
A-Team: What are the client benefits of using this award-winning solution?
Steve: It’s really about transparency and control. At the end of the day, firms need to be able to show regulators that they are taking robust steps to ensure data quality, whether they’re reporting their own data or delegating reporting to a third party. With Duco, everything is field level, and everything is self-documented, so you can see exactly what actions have been taken on data. And it’s about ensuring that change doesn’t throw your data out of whack.
For example, Duco’s eligibility validator can be used as a ‘golden source’ for eligibility rules. Firms can then check results against their internal rules and identify issues for investigations. If data or system changes happen upstream, you can easily see whether that’s impacting reconciliation.
Finally, the data and processes are in the hands of the business owners who know it. Duco’s Natural Rule Language, no-code approach and easy-to-use platform means changes don’t have to be routed through the IT backlog. Business owners can make the changes they need with little to no technical skill required. And the self-documentation I mentioned before means IT can sleep easy knowing they have full visibility into any changes made.
A-Team: Please run through a short case study of Duco’s transaction reporting solution
Steve: A customer preparing for the reporting changes to EMIR required a robust assurance package for trade reporting controls. They previously obtained the data required to report under EMIR’s expanded 203 fields from between eight and 12 internal systems, using manual reconciliations to verify the accuracy of an extremely large data set. This required the maintenance of complex macros, a large team to run and manage the reconciliations – and more resources needed to manage other incoming regulatory changes, and email-based exception management workflow. They lacked the capability to convert incoming ISO/XML formats and the ability to identify and remediate issues requiring escalation to their national competent authority.
Duco has removed these challenges, providing a preconfigured solution integrated seamlessly by our expert professional services team, for complete control assurance and to meet the customer’s core objectives. These include a way to easily transform and normalise internal system data to match the required ISO XML format, a two-sided reconciliation between the transformed internal files and those received from the trade repository, and exception management tools that streamline the process of getting remediation in place more quickly.
Duco’s preconfigured solution delivered all of these requirements. Data preparation and reconciliation in the platform is straightforward and can be managed by business owners without the help of IT, and automated exception management workflows enable centralised and transparent remediation and resolution of key issues. As a result, the customer has replaced manual reconciliations, removed the need for a slow and expensive IT change management procedure, and has confidence in their reporting data.
A-Team: How will you develop the solution over the next year?
Steve: Duco is developing similar solutions for additional regimes, such as ASIC and MAS, whose rewrites are going live in October. In addition, we’ll be expanding our eligibility and data validation capabilities to help clients manage a wide range of global regulatory regimes.
A-Team: Finally, what does winning A-Team Group’s 2024 RegTech Insight Europe award for Best Transaction Reporting Solution mean to Duco?
Steve: Recognition of our best-in-class solutions is key to giving customers understanding of our capabilities and confidence in their ability to solve key data automation challenges in the regulatory space. We’re incredibly proud of this award and know that it will bring an additional layer of trust for firms who may not have worked with us before but are looking to stay compliant with the data quality demands of an evolving regulatory landscape.
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