Confluent and Risk Focus Partner to Bring the Power of Event Streaming to Financial Services

Confluent and Risk Focus Partner to Bring the Power of Event Streaming to Financial Services

Confluent and Risk Focus Partner to Bring the Power of Event Streaming to Financial Services 

Confluent the enterprise event streaming platform pioneer, and Risk Focus, a leading consultancy for highly regulated industries, have joined forces to help Financial Services clients realize the efficiency and cost-effective benefits of event streaming architectures for Regulatory Compliance. 

Case Study – Regulatory Reporting Health Check

Content: Market Pressure

Helping a Global Bank Respond to a Regulator’s Audit.

Following the 2008 global financial crisis, policymakers in the G-20 committed to reforming domestic and international rules governing the over-the-counter (OTC) derivatives markets. In response, regulators across the world like CFTC, ESMA, MAS, ASIC, etc have come up with various regulations like central clearing through central counterparties to reduce counterparty risk and reporting of all eligible transactions to trade repositories to increase transparency. Firms are expected to comply with complex regulations constantly and may be subject to severe financial penalties and reputational risk in case of any deficiencies observed by the regulators.

The Client

A Global Bank that is a Swaps Dealer responded to a regulator’s audit of its OTC Trade Reporting by engaging Risk Focus to perform a Regulatory Trade Reporting Health Check.

The Challenge

Ever since the enactment of Dodd Frank in the US and similar regulations like EMIR in Europe, regulators have continued to monitor the data quality of trade submissions and provided additional guidance to trade repositories like the DTCC’s Global Trade Repository (GTR) in a bid to make the submission data more useful for their oversight. For example, EMIR reporting for OTC derivatives began in February 2014. ESMA Level 1 validations were rolled out in December 2014 and subsequently ESMA Level 2 validations in November 2015 requiring trade repositories to strictly enforce them and reject any submissions made by firms that did not comply with these. Hence, firms need to continuously monitor any changes to the regulations and subsequent impact on the message submission specifications provided by the trade repositories to remain complaint.

Regulators and their enforcement arms regularly perform audits to measure compliance with these regulations, and are most interested in seeing evidence that firms are in control of their trade reporting operations. Firms that can prove that they can retrieve historical reports with little effort and have mechanisms to ensure the quality, accuracy, and completeness of their reports will fare better than firms that can’t. Those that are found to be remiss or to have inaccurately reported their trades to a repository have been both fined millions of dollars and exposed in the media.

Our Solution

Our client, a large Global Bank that is a Swaps Dealer, was being audited by one of the enforcement arms of a regulator. The bank engaged Risk Focus to perform Regulatory Health Check to identify gaps in its reporting obligations to CFTC and ESMA for their Interest Rates, Foreign Exchange and Commodities businesses. Within 6 weeks the Risk Focus team was able to perform a detailed review of the current workflow for various products and trade life cycle events as well as analysed several samples of the firm’s submissions to the trade repositories. Accomplishing this in such a compressed time frame was made possible by leveraging the regulatory reporting controls from RegTek Solutions, the software firm spun out of Risk Focus in 2017.  The team identified gaps in the firm’s current reporting workflow and data quality issues with the submissions. At the end of the engagement, the team provided high-level recommendations to the client on how to address deficiencies like under-reporting and over-reporting of certain events and erroneous/missing/incorrect reporting of certain fields to the regulators.

The high-level approach followed during the engagement is as follows:

– Review of current reporting workflow for various asset classes and products

– Identification of trade life cycle event reporting scenarios for each of the asset classes and products in scope

– Comprehensive analysis of a sample subset of the firm’s submissions to the trade repository by performing a manual  three-way comparison between the firm’s submissions, trade repository specifications and the regulations as well as using RegTek’s industry acclaimed tool Validate.Trade

– Documentation of gaps and issues identified during the analysis and providing recommendations to the client to effectively address the shortcomings


Based on the high-level recommendations provided by the Risk Focus team at the end of the regulatory health check engagement, the client is embarking on a remediation program that follows our suggestions, which includes putting in place a new layer of controls alongside their transaction reporting platform, essentially future-proofing them from changes in regulations going forward by implementing a foundational control framework.

The remediation program based on the Health check findings will include the following:

– Implementing a control framework (from RegTek Solutions) for daily reconciliation of trading activity against trade repository reporting activity, as well as monitoring errors in real time

– Addressing the gaps in existing reporting workflows

– Back-reporting of any under reported/mis-reported trades


Existing MiFID II Reporting Solutions Might Not Be Sufficient

In the recent Global Investor Group Article entitled “Firms may not pass ESMA’s MiFID II Reporting Audit – Expert”, the expert who is quoted is Risk Focus’ Lloyd Altman.

In the article, Altman is quoted as saying ““In some cases firms squeaked over the line to be compliant with reporting rules on January 3, but one of the outstanding questions is whether they would pass the health check that we carry out to help them prepare for or respond to the European Securities and Markets Authority’s (Esma) audit”.

The MiFID II regulation is explicit in RTS 22, Article 15, that firms must have controls in place to ensure accurate and complete reporting. Risk Focus provides Health Check services to identify problems and weaknesses in their MiFID II and G20 trade and transaction reporting controls.

SFTR – When To Start & What To Do First?

SFTR – When To Start & What To Do First?

If 2017 was the year of MiFIR, with the January 3rd, 2018 deadline looming over everyone’s head, then the same could be said for SFTR in 2018.

The MiFID II deadline was extended by a full year, primarily because it was substantially different from existing MIFID Reporting, but most firms we talk with expect the April 2019 SFTR deadline will stick and not be extended, primarily because SFTR is similar to EMIR transaction reporting, albeit with key differences. Given that we’re already into Q2 2018, there’s not a lot of time left to plan, test and implement.

What to do first?

Risk Focus is already in conversations with investment firms regarding the first steps towards compliance. First and foremost, firms must start by assessing whether or not they will be impacted by SFTR at all. Borrowing from the words of the regulation itself, every firm should be able to answer the following two questions: “1. Do we, or any of our clients who have delegated reporting to us, engage in Repurchase Agreements (Repos), Securities Lending/Borrowing, Commodities Lending/Borrowing, Buy/Sell back, and/or Sell/Buy Back Transactions, as well as ‘reuse’ of collateral?” If so, then “2. are we or any of our clients an EU counterparty and if not, do we or our delegated clients engage in any of the transaction types listed above with EU branches of counterparties?” If the answer to any part of the second question is “yes”, then you know you will be impacted and will need to prepare to comply!

If you got to this part of our post, then chances are you have figured out that your firm will need to comply with SFTR. While you’re waiting for the compliance date to be finalized, there are several activities that can start immediately, especially when it comes to organizing your data. First, you should assign a team member to study the Technical Standards, otherwise referred to as the RTS. In the RTS you will find that the data is organized into four tables: Counterparty Data, Loan and Collateral Data, Margin Data, and Re-use, Cash Reinvestment and Funding Sources Data. We are already working with clients to get these four categories of data in order, so that the proper kickoff of a development phase won’t be hindered by incomplete or incorrect data.

To date, most of our SFTR-related engagements are “Health Checks”. Financial institutions bring us in to assess their overall data quality and the reporting eligibility of their positions, from which we make recommendations. Depending on what is found during the Health Check, Advisory, Architecture, and Implementation engagements can follow, which was the case for MiFIR and G20 Reporting regulations.

Risk Focus APIX Powers Xignite’s CloudAddin

Risk Focus APIX Powers Xignite’s CloudAddin

March 16, 2018, New York, London, Risk Focus, Inc., the specialist provider of trading, regulatory, and risk services, announced today that its APIX For Excel product is the engine that powers Xignite Inc.’s CloudAddin, a Microsoft® Excel Add-In, specifically designed for Excel power users, application developers and data scientists. APIX powered Xignite CloudAddIn lets analysts, portfolio managers and quants access and integrate streaming real-time, fundamentals and historical financial market data directly into Excel spreadsheets. APIX is unique in its ability to dynamically expose enterprise service APIs to Excel® in the form of easy-to-use native functions. APIX combined with zero footprint data APIs from Xignite completely eliminates the need to store or manipulate market data on customer site.

Srikant Ganesan, Head of Risk and Trade Solutions at Risk Focus, commented: “CTOs and software groups struggle to make Excel-based applications first class consumers of the data service APIs already being used by the rest of their organizations. They usually have to support custom solutions for their Excel clients that don’t scale well and are difficult to secure and audit; they also require frequent deployments onto the desktop. Despite this, Excel is widely used by every client we work with. We call this ‘the Excel Paradox’ and are pleased that Xignite has selected APIX for its CloudAddin so that clients can benefit from the flexibility of Excel, while accessing the models and data they need through secure, scalable, supportable and auditable APIs.”

“The world still runs on Excel and Wall Street is seriously addicted to it,” says Stephane Dubois, CEO and Founder of Xignite. “Most professional and retail investors still use Excel to develop analytical models and drive investment decisions. The financial data needed to feed those models often come from expensive terminals or unstable sources via legacy interfaces or painful and time-consuming manual downloads. By using CloudAddin for seamless access from Excel to the sea of data we have in our Market Data Cloud, our clients can have a consistent market data source across their application stack, and maybe even save the cost of a few terminals in the process.”

Xignite’s new CloudAddin simplifies extracting and integrating financial data. After installing the CloudAddin, users can easily access billions of financial data points from any of Xignite’s 45 APIs, which cover millions of instruments across all asset classes, including equities, ETFs, mutual funds, fixed income, forex, options, futures, and other derivatives. Users can also stream real-time data into Excel via HTTP by simply calling an Excel function.

Regulatory Reporting Advisory Services

Risk Focus Inc., the leading provider of Trading and Risk Solutions, today announced their new Regulatory Reporting Advisory (RRA). The service is designed to help clients comply with global trade reporting regulations, meet aggressive deadlines and build solutions for regulatory compliance, including upcoming regulations like Securities Finance Transaction Reporting (SFTR), effective early 2019. Risk Focus RRA offers support for all aspects of regulatory reporting and controls. Workshops, health checks, assurance reviews, education, and training all ensure that Risk Focus RRA provides stability in times of constant change.

As the preferred implementation partner for RegTek.Solutions, Risk Focus RRA has already held both onsite and remote workshops for many clients, guiding them through the changes in EMIR RTS regulation and the DTCC Global Trade Repository at the end of last year.

According to Srikant Ganesan, Senior Managing Director of Risk Focus Financial Services Solutions, “The formal announcement of our solutions signifies what our clients have known for years; Risk Focus is the firm to turn to for expertise and advice related to trade and transaction reporting challenges, be it a health-check, a training session or a full-on implementation.” Lloyd Altman, Global Head of Business Development added; “Our RRA service demonstrates the team’s focus on customer’s compliance, providing full support and measurable value.”

Risk Focus RRA is designed to assist clients to assess, select, build and implement control tools & systems around both existing and upcoming regulations. These cover all aspects of regulatory reporting, including key controls such as completeness and accuracy assurances.