Regulatory Transaction Reporting in the Cloud


Today, Financial Services companies spend millions of dollars building applications and infrastructure to support regulatory reporting. By November 2019, FINRA will require financial services companies to implement Consolidated Audit Trail (CAT) that will track orders throughout their lifecycle and identify the broker-dealers involved in them. CAT will allow regulators to more efficiently and accurately track activity in eligible securities (equities & equity options) throughout the U.S. markets. To implement CAT, your firm will likely face the challenges in:

  • Deploying CAT against legacy trading systems & infrastructure
  • Sourcing and normalizing regulatory data, such as transactions & client master data from multiple legacy systems
  • Re-purposing existing regulatory reporting solutions for CAT
  • Managing data quality through-out the reporting life-cycle, while still remaining efficient in reporting
  • Shortening reporting cycles to intra-day, with the aim of reducing fines

Meeting the expected CAT deadline of Q4 2019 (Q4 2018 for large Broker-Dealers), offers your firm an opportunity to think differently in delivering the solution to meet the requirement. Instead of following the traditional approach of building and supporting the application in your on premise data center, a cloud approach offers an efficient and cost-effective solution. The first step in this approach is creating a regulatory transaction data lake in cloud, driven directly from your transaction booking systems. A cloud based data lake provides flexibility to scale as source data scales. It also enables a strong separation of structure and transformation logic, greatly simplifying support and further enhancements. The commercial cloud model shifts your firm’s costs from a CapEx expenditure to a purely OpEx expenditure giving you the flexibility of scaling the solution and paying for only the resources needed.

A cloud based solution offers:

  • Flexibility and transparency of data requirements.
  • Real-time exception management capability – proactive management of reporting ahead of submission.
  • Data quality management intra-day reducing the potential for regulatory fines.
  • Throughput and size of storage, allowing online query and management information (MI) capabilities in addition to the main reporting function.
  • Normalized data for reporting, potentially expanding to other regulatory reporting regimes.
  • The possibility of consolidating regulatory reporting by implementing & modifying the business logic in cloud (shared rule base) versus each transaction system for current & future regulatory reporting.

A good cloud reporting solution will ingest and transform reportable events from your firm into the standard CAT processor format, adding state of the art controls (dashboards, validation logic, etc.) and integration with your firm’s remediation processes. A dashboard will improve the user experience by displaying the transactions (orders, executions & allocation), CAT Processor Key Process Indicators (KPIs), Pre-Checks, and Event Volume, which can allow you to drill down further to see the detail information. This guides operational effort towards the issues with the highest potential impact and allows capacity planning by comparing current activity with historical trends.

Security should be a cornerstone of the application architecture. This is done by utilizing data provided by clients, accessible to and only for a limited duration, all via a highly secure key-managed connection. Another key feature would be to architect with machine learning in mind, to capture data of transactions which were corrected – eventually allowing for auto-correction of recurring patterns. GFT offers precisely such a solution. Though focusing initially on CAT, it has been designed to be regulation agnostic, with the eventual goal of supporting all new transaction reporting regulations.

In summary, a cloud solution shifts the business logic from the legacy data center transaction systems to a cloud based Regulatory Transaction Reporting Application. The cloud based solution reduces costs and time to market as your firm can scale the additional storage and computing power as needed. Financial services firms reduce the need of capital expenses of purchasing computing hardware and on premises location, transferring the costs to operating expenses by using and paying for only what your firm needs. Lastly, acquiring a regulatory reporting solution with an extremely competitive long-term cost profile allows financial organizations to focus their investments on building competitive advantages in other areas.