Regulators are now demanding improved data quality. This is the intent of years of regulatory change in the financial markets and trading space. To support these requirements, it is becoming extremely important to have good ‘data lineage’.
Data lineage is being able to see data from its origin to its end point. Creating a golden source (the single, definitive, and most accurate version of data) for transactions data allows firms to utilise regulatory reporting software or services with more ease. All the work being done with the collection and centralisation of quality data from firms can also be optimised for future business operations.
The FCA in Market Watch 81 discussed how data governance is one of the five themes where there are existing issues in relation to the cause of trade reporting errors. Insufficient documentation on data lineage can undermine data integrity used in transaction reporting. Their recommendation was to eliminate the disconnect between data management and regulatory reporting which could be done for example, through having data dictionaries and data lineage documents that explain how data elements are used and where necessary, upgraded. (See our article here for more details on the FCA’s observations and recommendations)
What are the common problems with data lineage?
- Design of custom spreadsheets relying on manual input
- No verifiable logic, which makes it difficult in reconciliation as you can’t see the rules used to transform the data into the values reported to the TR (the trade report).
- Human dependant – There might be a lot of macros or manual processes which make it hard to produce reporting if a key person who creates the process is absent.
- Creating trade reports in Excel can cause a lot of data errors, from truncation to US date formats.
What does TRAction do to assist in ensuring good data lineage?
Data extraction
There are various methods by which TRAction is sent transaction and lifecycle data (valuations, collateral) from its clients:
- TRAction provides clients a logic document outlining the rules governing the transformation process.
- Once a client is onboarded, the daily processing and reporting happens automatically and does not rely on any individual person doing a manual process.
- Bespoke connections are set up to extract the relevant data directly from several client trading platforms and remit to TRAction. These platform integrations minimise the risks associated with human intervention as part of daily data processing. Read more about available integrations on our dedicated page here.
- Through connections to our clients’ APIs or databases, TRAction is able to extract their data which can be enriched and processed – after which, it is uploaded to the relevant regulatory body (trade repository or approved reporting mechanism). The result is that clients benefit from a hands-off method that improves their reporting efficiency with little manual input.
- Some TRAction clients have a preference or security requirement to host their own SFTP server. This is the mode under which TRAction is able to connect and pull the data down for processing and enrichment.
- If TRAction is not able to connect to client databases (or if it is not simple for TRAction to do), our clients upload their data in CSV files onto our ShareFile portal. The CSV file only requires essential trade information, for example, under the MiFIR regime, the trade reports require 65 fields to be populated but TRAction only needs a small number of key data in the CSV (perhaps only 10 fields) to create and populate a report ready for submission.
Conversion and enrichment
After TRAction performs the above data extraction, we convert, enrich and validate client data into the reporting formats that are required according to the relevant reporting regimes. This is so our clients’ trade data meets the submission requirements before final submission to the relevant trade repository or approved reporting mechanism (ARM).
Once the reporting process a completed, TRAction provides access to our secure portal to download confirmation files and copies of the trade reports submitted.
For more information please see our article here and our webpage here to see TRAction’s relevant services.
How can TRAction assist?
Should you need further clarification on the above issues or have any questions on your trade reporting, please get in touch with us.
