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The Trading Mesh

Effective Data Management in a Fragmented Market

Fri, 23 Mar 2018 04:09:00 GMT           

By Breige Tinnelly, AQMetrics

Our recent conversations with compliance and risk managers at investment management firms have highlighted a common pain point, which is how to put in place the right kind of technology platform to cater for both existing and future regulations. While their focus has naturally been on the most pressing compliance concerns ushered in under MiFID II, AIFMD and SEC Modernization (to name but a few) the reality is that a piecemeal approach to compliance is unsuitable for the fragmented regulatory changes that the industry now faces. And fragmentation exists on a number of levels, not only in the various rule changes at both the national and European levels, but also in the diverse approach market participants are taking when it comes to interpreting and implementing the various regulations.

One of the main problems we’re hearing is that investment firms need to focus on managing their day-to-day market risk and credit risk, but are now also being pushed by their investors to demonstrate they are effectively managing their operational risk as well. This is of course in addition to the increased regulatory requirements for transparency and increased oversight, with a number of significant changes scheduled for the first few months of 2018 alone. And we know from our close engagement with the market that the regulatory reporting demands of MiFID II alone already has many firms swamped.

Nimbler responses

The solution? Instead of adopting a quick change that is only effective in the short-to-medium term, investment managers need to be able to take a step back and adopt a long-term, holistic approach to the complex challenge of fragmented regulations and the need for greater risk control. That is where ‘as a Service’ technology, such as AQMetrics, comes into its own, by enabling firms to use the same ‘golden source’ of data, but for a variety of different purposes.

Beyond the piecemeal approach – a single ‘as a Service’ technology platform

At AQMetrics, our Data Management as a Service technology is created with one strategic goal in mind – to provide a single golden source of data that can be used for both our Risk as a Service and Regulatory Reporting as a Service technology. By handling a wide range of complex data across the board from a centralised hub – regardless of the size or type of firm – and adopting a standardised data management model, AQMetrics empowers organisations to respond to gain risk insights and regulatory change with greater agility, across multiple business functions. AQMetrics Risk as a Service technology, includes risk analytics such as VaR, the Greeks and Stress Testing, coupled with dashboards, alerts, workflow and audit functionality. We’ve also got Regulatory Reporting as a Service technology on our software platform and as an Approved Reporting Mechanism (ARM) under the Central Bank of Ireland, AQMetrics is a regulated entity, entrusted by some of the largest investment managers in the market to process all of their trade data for regulatory reporting.

We believe this holistic approach to ‘as a Service’ technology is the only effective way to truly tackle fragmented regulations and market changes head-on, regardless of what is coming down the road.