Repository Reporting and Blockchain
Trade Repository Reporting is probably one of the most interesting use cases of XVA Blockchain, as the benefits from applying blockchain technology to use cases in regulatory reporting are directly related to the general characteristics of the blockchain and immediately apparent:
- Risk reduction from decentral structure and transparency. In contrast to centralized IT systems our distributed ledger technology will reduce operational risk completely. There is no risk of terror attacks and there is no risk of internal fraud. Therefore contingency plans, secondary emergency locations and four-eyes-principles will vanish.
- Massive efficiency improvements as a result. The superior security of blockchain technology reduces costs for Repository Reporting services tremendously and enables us to offer a very competitive offering to the existing market players.
- Extremely efficient processing for reconciliation of data. Especially regarding the mandatory “double sided reporting” introduced by regulations like SFTR or EMIR Refit.
- Delegated Regulatory Reporting to DTCC for all reporting obligations e.g. CSDR and data enrichment services on- and off-blockchain.
What is next?
As we slowly emerge from our socially distanced bubbles and contemplate the view beyond our own back garden towards the wider world again. More specifically, towards the regulatory reporting landscape. So why is that piquing interest in particular? When it comes to the regulators’ priorities, that is. After CFTC Dodd-Frank reporting went live in 2013, all has been relatively quiet on the US regulatory reporting front, with Europe’s EMIR, MiFID II, and much more recently the inflight SFTR taking all the limelight. In terms of the future of EMIR Reporting, the REFIT is slated to bring a major update to the technical standards in Q4 2022 or Q1 2023. Before those big changes take place, a smaller update was done recently. Affecting both the EU and UK version of EMIR, ESMA introduced validation updates to the regulation last September. The changes went into place on March 8th, and are focused primarily on Margin and Collateral fields as well as historical dates available in timestamps. Collateral and margin updates based on how transactions are collateralized between counterparties, EMIR requires different margin information to be submitted. With the changes, new validations are being put in place toward information that previously was optional and now becomes conditions. What’s next? While there is some talk of that the industry is urging regulators to consider longer implementation time periods to accommodate the impact of COVID-19, it by no means feels like the regulatory world has hit the pause button. The priority for firms now will be to figure out the best working practices to meet the respective deadlines in this new world.
SFTR (Securities Financing Transactions Regulation) Delegated Reporting
XVA Blockchain is strongly focused on the new regulatory approaches like double-sided reporting in SFTR or EMIR and additional data demands emerging from the needs for bilateral margining, collateral management, and the mandatory introduction of initial margins in OTC markets.
Whenever existing reference and market data is sufficient within your existing IT systems: our reconciliation layer on blockchain can be applied. In the regulatory reporting space we are proud to be the partner of DTCC.
Senior Implementation Consultant
Smriti is Senior Implementation Consultant and XVA Blockchain’s representative at the GTR vendor group of DTCC. Smriti is an experienced test manager, who started her career in 2007. She holds an ISTQB Foundation Certification in Testing of German Testing Board. In her career she supported various capital market clients like Clearstream in preparing a contingency action plan (CAP) for T2S business day delay scenario for SWIFT or supported the market risk department of DVB Bank in Germany as an interim manager for market risk and compliance e.g. German MaRisk and other compliance topics in financial services.
Sunil Preethik Markandan Nirmala
Senior Full-stack Developer