Consistent Regulatory Reporting via the Common Domain Model
The ISDA Common Domain Model (CDM) is an open-source, standardised representation of trades and events that occur through the lifecycle of financial market transactions. We propose to express regulatory reporting requirements across G20 jurisdictions as machine-readable instructions in the CDM and automatically distribute them as executable code to support consistent market wide implementations.
Regulatory Reporting
Please share how your solution addresses the problem statement selected, wholly or in part. Why is your proposed solution most suited to addressing the problem statement?
ISDA and REGnosys propose to partner to showcase how the ISDA Common Domain Model (CDM) can support a sustainable solution to the Regulatory Reporting problem statement of the G20 TechSprint.
By standardising and digitising the data representation of trades and events through the transaction lifecycle, the ISDA CDM supports end-to-end automation and a straight-through processing infrastructure for regulatory reporting across the industry. Reporting rules can be expressed as functional code in the same model as the transaction and event data, thus providing a complete set of logical instructions to produce the required report output.
The CDM and its functional reporting components are automatically distributed as code in multiple languages, and CDM-based transaction scenarios can be made available as a “test pack” for reporting entities to test the reporting logic. The generated code and test pack are centrally available to produce a reference compliance implementation, thus relieving reporting entities from interpreting, implementing and maintaining their own versions of the requirements and enhancing the quality and consistency of the data collected by regulators.
For the G20 Regulatory Reporting TechSprint, we will look to demonstrate the capture of reporting requirements in this format for one Asia-Pacific jurisdiction, focusing on some of the internationally accepted “Critical Data Elements” from CPMI-IOSCO.
Please describe any prior experiences and expertise you have in implementing RegTech/ SupTech solutions and the results (e.g. winning challenges, awarded funding, interest from corporate clients and investors or partnership/regular engagements with regulators or supervisors, etc.) Our team was mandated by the FCA and Bank of England to implement the derivative use-case for the UK “Digital Regulatory Reporting” (DRR) pilot in 2019. We delivered a working prototype of machine readable and executable rules for EMIR and MiFID II Transaction Reporting regimes using the ISDA CDM. The initiative received public funding and the results were demonstrated as part of an “Open Day”, attracting more than 200 participants from the industry community, and were later published as part the UK regulators’ data strategy. https://www.fca.org.uk/news/press-releases/fca-and-boe-announce-proposals-data-reforms-across-uk-financial-sector
The UK DRR pilot raised interest among other global regulators looking at reforming their own data collection process. A similar prototype was built earlier this year for the CFTC Rewrite and demonstrated to the CFTC Technology Advisory Committee in February 2020. Earlier in 2019, we were invited to demonstrate the potential for “machine executable reporting” by the European Commission, who are now considering their own pilot aimed at the upcoming EMIR Refit requirements.
In October 2019, the ISDA CDM was awarded the winner in the “Outstanding Project – Derivatives Innovation” category in the Regulation Asia Awards for Excellence 2019.
Please share your motivations for wanting to participate in the TechSprint. Have you participated in previous hackcelerators/hackathons? If yes, which ones. Our team are regular participants in open innovation events.
The UK’s DRR project started life as a “TechSprint”, also organised by the FCA and Bank of England in November 2017. This TechSprint demonstrated how a model-driven approach could enable straight-through processing of regulatory reporting, from rule-writing to producing a report, and our engineering team was instrumental in delivering that first working prototype. https://www.fca.org.uk/events/techsprints/model-driven-machine-executable-regulatory-reporting-techsprint
As an open-source project, the ISDA CDM has already supported several open innovation events which our team was a partner in, notably Barclays’ “DerivHack”, held across 3 locations (New York, London and Singapore) in 2019. https://www.ey.com/en_gl/banking-capital-markets/how-financial-services-can-accelerate-the-adoption-of-the-isda-common-domain-model
Explain how your solution distinguishes itself from the others in the market and why it should be shortlisted for the TechSprint. Our proposed solution features three main differentiating factors.
-
Goal alignment. Our motivation to address the G20 Regulatory Reporting problem statement is that it embodies the theme on which our Company was founded: to radically change how regulators and regulated firms interact, by moving to a machine- readable and executable regulation paradigm. Rosetta is a purpose-built technology which we developed in the pursuit of that goal and which led us to work as ISDA’s technology partner to build the ISDA CDM. The solution has been designed for open innovation from the start, through an interactive platform that facilitates collaboration between industry participants.
-
Industry validation. The solution leverages the ISDA CDM, an industry-led and peer-reviewed standard which, among other key benefits, aims at delivering better regulatory oversight by promoting transparency and alignment between regulators and market participants. The ISDA CDM is an emerging open-source technology built for the digital age and several existing market participants and technology solution providers have publicly signalled adoption of the CDM as part of their infrastructure.
-
Maturity. The proposed solution has already been tested for similar pilot use-cases in various jurisdictions, namely the US and EU (through the “Digital Regulatory Reporting” pilot). Those prior implementations will be leveraged to accelerate the delivery of the G20 Regulatory Reporting TechSprint.
Please indicate what stage of development is your solution currently at? Pilot
How is your team organized? Who are the key members in your team, what are their backgrounds and what are their roles and responsibilities within the team? Our cross-functional team of software engineering, data modelling and regulatory and legal experts builds on the existing partnership between ISDA and REGnosys to develop the ISDA CDM.
Key team members:
- Ian Sloyan, Director of Market Infrastructure and Technology at ISDA (London), leads the ISDA CDM project and prior to this was the Director for Data and Reporting for EMEA.
- Ruddy Vincent, Associate Director of Market Infrastructure and Technology at ISDA (London), is the project manager for the ISDA CDM and is experienced in the implementation of EMIR, MIFID II and FinfraG.
- Rishi Kapoor, Director of Public Policy for Asia-Pacific at ISDA (Hong Kong), runs ISDA’s APAC reporting working groups and has worked with regulators across the region to help implement OTC derivatives reporting requirements.
- Lyteck Lynhiavu, Senior Technical Analyst at ISDA (New York), runs the FpML reporting working group and has developed technical messaging standards for every trade repository globally engaged in OTC derivatives reporting.
- Minesh Patel, Senior Engineer at REGnosys (London) led the development of the Rosetta technology, which powers the ISDA CDM and the DRR pilot for EMIR and MiFID II Reporting.
This team will be able to draw on ISDA’s decade-long experience working with its members to implement derivatives reporting requirements since the G20 Pittsburgh commitment that all OTC derivative transactions should be reported to trade repositories.
If shortlisted for the TechSprint, will your team be available to participate in the TechSprint milestone events (i.e. virtual touchpoint event in July and prototype demos in October/November if selected)? Yes
URL Please list any URLs to projects / innovations / product and platform development etc. mentioned in your proposal. www.isda.org/a/KFXTE/DRR-Paper-Updated-Audio-2020.mp4?_=3