Alpha’s latest view on regulatory reporting

Increased responsibilities for asset managers are driving complexity and new approaches.


  • A series of regulatory initiatives and rule changes following AIFMD, European Market Infrastructure Regulation (‘EMIR’), Solvency II and MiFID II has greatly increased the volume and complexity of regulatory reporting that asset managers and their counterparties are required to deliver
  • In-flight MiFID II programmes are defining further requirements for significantly enhanced reporting obligations for transaction and trade reporting, which are in turn driving operational and systems changes – with new vendor solutions often being considered
  • Transaction reporting under MiFID II requires greater detail than current arrangements under MiFID 1, due to an expansion of instruments in scope and a greater range of identifiers. The broker exemption – which allowed the majority of asset managers to opt out of much of transaction reporting – is being removed under MiFID II
  • Trade reporting is the near time reporting that all in-scope firms need to report as quickly to real time as possible. The requirements remain partially unclear and asset managers are determining the proportion of trades that require reporting (primarily those conducted off exchange) as they seek to build proportionate reporting processes via Approved Publication Arrangements
  • EMIR – which is derived from a G20 priority to see reduction of systemic, operational and counterparty risk in derivatives markets – requires every derivative contract entered into – including interest rate ,equity, foreign exchange and commodities – to be reported to a trade repository as soon as is possible, and no later than T+1
  • AIFMD also prescribed numerous reporting requirements to support the risk management objectives of the legislation, much of which still remains in its relative infancy.

Why is it important for our clients?

  • The timeliness and accuracy of regulatory reporting remains a key priority for regulators in the EU and for the FCA in particular. There have been numerous high profiles fines for failures in transaction reporting under MiFID I. ‘Under the radar’ the FCA’s Transaction Reporting Unit (‘TMU’) has initiated skilled persons reviews and required senior managers to provide attestations to confirm arrangements are fit for purpose
  • The regulatory risk associated with a failure to report correctly is high in both probability and impact and obligations are expected increasingly fall to nominated senior managers as the Senior Managers Regime develops
  • Asset managers are increasingly concerned to know how best to make use of technology and workflow so that historic manual processes and workarounds can be improved to reduce risk and make better use of resource.

Key Considerations

  • The way that data from multiple sources – including external counterparties as well as OMS and EMS – is managed to support current and evolving reporting requirements, and where the required outputs are not particularly well-aligned, is an evolving challenge
  • The operational ,key person and regulatory risks that asset managers are exposed to when relying on a mix of automated and manual processes for report production and checking is increasing
  • Allocating budget for the systems build and vendor costs has proven challenging for many asset managers new to the intricacies of transaction reporting in particular
  • Developing a clear set of business requirements to design and build the operational methodology and the subsequent checking of the timeliness and accuracy of reporting – including oversight of vendors and counterparties in the value chain – is stretching resources and expertise

How can Alpha help?

There are a number of key ways in which Alpha can support its clients in meeting regulatory reporting requirements:

  • Independent assurance and review: Alpha’s specialist teams can test the completeness and effectiveness of current regulatory reporting to determine whether desired outcomes are being achieved – both in terms of senior management satisfaction and with respect to regulatory requirements
  • Operating model review: Using established proprietary methodologies Alpha can assess the operational effectiveness of reporting to determine key risks and gaps, and to develop road maps for change according to a defined future state model. Key considerations include use of advanced workflow techniques, current use of manual processing, the prevalence of workarounds and effectiveness of data management
  • MiFID II: Alpha is able to support asset and wealth managers develop and implement effective reporting solutions for MiFID II transaction and trade reporting – including defining business requirements, required systems developments and vendor selection to a defined the operating model
  • Vendor selection: Alpha’s specialist teams can provide support for vendor selection in relation to the reporting process – particularly as asset and wealth managers seek to assess the ‘pros and cons’ of specialist vendors and the way their products and services align with OMS and EMS systems
  • Benchmarking and subject matter expertise: Alpha can assist firms to review current reporting processes and the performance of outsourced counterparties through bespoke benchmarking exercises and peer group review
  • Data management and workflow: Alpha’s data and digital specialists can look at the data management processes required to support specific regulatory reporting, both now and under MiFID II, and consider the extent to which greater use of workflow management may assist streamline the process and reduce regulatory risk

“The FCA has made it clear in its supervisory and enforcement work that it regards the accuracy and completeness of reporting as a real priority and will hold senior management to account if this is not the case”

Andrew Glessing, Alpha Director & Head of Compliance Practice