Market participants doing business in the European Union face an additional regulatory regime starting in 2020, one that will challenge their operational capacity to report large volumes of securities financing transactions (SFT) to trade repositories (TRs). While many of these firms are experienced in reporting OTC derivatives trades to TRs under the EMIR regime, the EU’s Securities Financing Transactions Regulation (SFTR) will place additional pressure on standard operating procedures and impose new compliance burdens in a business area previously untouched by such mandates.
DTCC’s Global Trade Repository service (GTR) is the premier transaction reporting and disclosure solution for clients and regulators worldwide. Launched in 2012 to in response to the G20 recommendations for risk mitigation in the OTC derivatives market following the 2008 global financial crisis, GTR is the largest trade repository for OTC derivatives, processing some 40 million open positions a week and more than 11 billion messages for 5,250 clients in multiple jurisdictions around the world.
In response to SFTR, GTR is offering an end-to-end client service program that includes all the features of its standard global client support system along with new enhancements and specific testing tools designed for SFT reporting.
GTR’s partnership model
Over the years GTR, in partnership with its user community has amassed unparalleled expertise working with a wide array of market participants. This experience allowed GTR to build out its functionality to accommodate SFT, making GTR a one-stop shop for clients’ transaction reporting needs.
GTR’s multi-channel client service operation provides comprehensive support throughout clients’ trade reporting lifecycle, from onboarding and connectivity through to testing, go-live and post-reporting data analysis. Enabled by its global footprint, GTR provides follow-the-sun support servicing clients in Europe, Asia, North America and Canada. Its email and call centers connect to a case management system to create a feedback loop with clients, relationship managers and client service staff.
SFTR’s unique challenges
Compliance with SFTR, as with any new mandate, is generating anxiety among firms that will be required to comply with it. Not only does SFTR cover a broader swath of market participants than EMIR’s derivatives rules, the securities finance industry has a heavier lift in preparing for SFTR compliance, particularly in the areas of data availability and daily workflows. For instance, SFTR requires up to 153 fields for data reporting, compared to 129 fields under EMIR.
“Firms under the SFTR mandate are asking questions like, ’Do we have the right systems in place for organizing our trade data and transmitting it to a TR efficiently? How do we know if our trade data is robust enough to meet the standards of the new rules?’,” said Maria Dwyer, Managing Director, DTCC Solutions Client Services and Business Operations. “GTR has responded to these concerns by developing an end-to-end support service that starts by helping these firms understand the regulation and their obligations, then gets them connected to our platform and provides value-add with analytical resources that can enhance the quality of their data.
“GTR’s success is driven by our collaborative relationships with clients, regulators and industry partners,” Dwyer added. “We’re committed to minimizing the client build-out effort and facilitating SFTR implementation to the greatest extent possible.”
New support tools and practices
As the demands of GTR’s user base continue growing, in response to the ongoing release of new and revised technical standards by regulators, GTR keeps improving its client support model.
“The increasing volume of messages we process and number of clients we support has generated a large number of user inquiries over time, which funnel into GTR’s client support teams,” said Luca Cappelletti, Global Head of Client Service for DTCC’s Repository and Derivatives Services group. “Since 2012 we have evolved from a reactive helpdesk to deliver a more proactive user experience. Having our client community represented on our board and steering committees drives the voice of the client right to the heart of our business both in terms of product delivery and continuous improvements to our support services.”
GTR has also invested heavily in new client service tools over the last three years, “putting a variety of knowledge, testing and training modules at clients’ fingertips,” Cappelletti said.
These new tools will be easily accessible thanks to a redesigned user portal GTR began rolling out in 2017 to improve the client experience. Users now have direct electronic access to the data stored in the repository maximizing user control over the content, number, and frequency of reports generated.
“The portal redesign grew out of lessons we learned from the go-live of EMIR derivatives reporting in Europe several years ago,” said Dwyer. “With EMIR we could see patterns of repeated inquiries, so we built into our new platform hands-on learning resources that guide users to the answers of common questions.”
Besides its self-service capabilities, the new portal offers a simplified, more-intuitive interface along with features that can smoothly integrate other DTCC solutions into clients’ trade lifecycle-management workflow. Features include an advanced dashboard that provides a snapshot of submission, trade, and reconciliation data; analytical tools that enable performance benchmarking by country; and a feature-rich search interface that expedites data queries and customization options to filter and sort query results. The portal’s enhanced landing page shows a summary of user data from the previous reporting day.
“Clients coming on board for SFTR reporting will realize all these benefits,” said Dwyer. “And I’d encourage existing GTR clients who haven’t yet switched to move to the new portal.”
From onboarding to testing
Onboarding to a new service is often cumbersome for clients, Cappelletti noted, but GTR’s SFTR offering delivers a “slick, web-based, digital onboarding process. New self-service features will streamline onboarding and eliminate a lot of the headaches that typically characterize this process.”
Once onboarded, firms will need to test their internal builds and identify where their data quality requires improvement, to ensure operational conformance with SFTR. To give clients a long lead time to prepare for the new mandate, which will be phased in by type of entity starting in April 2020, GTR worked with users and vendors to develop an innovative pre-user acceptance testing (UAT) simulator. Available now and at no additional cost, the simulator allows clients to submit test messages and determine whether they will be “acknowledged” or “negative acknowledged” by GTR’s trade message validation process. For negative acknowledged messages, the simulator flags why the message has not been acknowledged so firms can adjust their messaging specifications accordingly – and proceed to UAT later this year with confidence.
For SFTR, GTR has structured its UAT phases in order to support both vendor and client testing. It will be making downloadable testing scripts available to clients. “Furthermore,” said Cappelletti, “our UAT environment will be live from August 2019, which along with this structured approach to testing will help avoid a last-minute free-for-all that can occur with new regulations as go-live approaches.”
“Besides our platform, testing tools and training modules, something else sets GTR apart from the competition: we continuously adapt our client support to respond to the needs users bring to our door,” said Dwyer. “We assimilate best practices by participating in the Consortium for Service Innovation and the incremental investments we’ve been making across support are reaching an apex to coincide with our SFTR launch.”
Among the improvements is the move to knowledge-centered support, with solutions to commonly asked client questions organized by topic to help GTR respond quickly and resolve issues consistently.
What’s more, GTR is integrating the Agile methodology into its client support system.
“Our software developers in the Asia-Pacific region employed Agile in building out our new portal there,” said Cappelletti. “Now we’re extending Agile’s squad-based collaborative practices beyond IT applications to the delivery of client service. It’s a groundbreaking use of Agile that will laser-focus us on streamlining our responsiveness at every step of our client interactions.”
Clients are taking note of GTR’s client support performance. In DTCC’s latest Brand Equity Survey, conducted in December and January, the company’s brand attribute ratings registered the largest increase in Europe, thanks to positive feedback from GTR users. Furthermore, GTR clients overall reported significantly increased engagement with the business and showed greatly improved perceptions over the past five years in areas like proactivity, reliability, expertise and client focus.
“We’re extremely proud of the level of support we offer our clients,” said Dwyer. “This enhanced client support model, along with DTCC’s ongoing commitment to mitigate risk, automate processing, enhance transparency and drive down costs in transaction reporting enable us to deliver a compelling SFT offering to clients in Europe and beyond over the coming years.”
Originally published in Securities Lending Times.