To help drive our program for our members, the CRTA posed a question on our website: “What business problem are you trying to solve?” Responders were asked to select their top three issues from a range of options, including topical themes such as open banking, digital ID and compliance for evolving businesses (e.g. cannabis, cryptocurrency and robo advisors) along with more ‘legacy’ themes such as regulatory reporting and regulatory change management. Preliminary indications show ‘Compliance Effectiveness’ as the primary issue, followed by “Regulatory Change Management” and “Regulatory Reporting”. This seems to indicate that financial institutions continue to struggle with how to manage and measure their compliance programs.
Through our association’s work, we are continually introduced to innovative RegTech tools and there are tools to assist with regulatory intelligence tools such as Corlytics and Cube Global– but can they be effective in a country like Canada where regulation is primarily principle-based? And can they be easily integrated into current processes? We will look to explore these topics further in our 2020 program.
It is not surprising that trade reporting requirements continue to challenge Financial Institutions (FIs) not only due to the sheer breadth of requirements but also the lack of data standardization across borders, which makes it increasingly difficult for FIs to repurpose data. Having recently completed the Markets in Financial Instruments Directive (MiFID II) requirements and enhanced debt reporting requirements for IIROC, dealers who conduct business in the U.S. now need to comply with new mandates set by the Securities Exchange Commission (SEC). SEC Rule 606 reporting requirements have been enhanced to bring greater transparency and assurances that orders are handled in line with the principles of best execution and the Consolidated Audit Trail (CAT) Rule 613, which requires the reporting of life-cycle data for equities and options on a daily basis. Here in Canada, in 2020 we can expect amendments to the Derivative Trade Reporting Rule to accommodate international adopted data standards.
In the last 5 years or so we have seen a lot of effort by FIs to consolidate data into data lakes, but without data standardization, the intended outcome – whether cost rationalization or monetization strategies – is limited. There has been some progress from international bodies such as CPMI-IOSCO to address reporting standardization, but this is not going to be solved easily or soon.
As we enter our second year as an association, the CRTA will incorporate these important topics into our program. Watch our website for upcoming events and insights from the community on our blog. www.regtech.ca
Donna Bales is co-founder of the Canadian Regulatory Technology Association.