Often firms view complying with regulation as an obligation to avoid penalties and fines. However, have you considered how compliance can not only improve your business processes but add to your revenue as well?
Here’s some ways that you can use your regulatory reporting data to benefit your business.
Aligning key metrics between regulators and businesses
The regulators are strongly encouraging counterparties to use reporting data in their own internal risk and compliance management processes. The aim is to create more consistent reporting by indirectly incentivising counterparties to gather more accurate data. Crucial to this plan is requiring information which can be used to derive business insights and help project future decisions.
Understand Product Demand
During the reporting process, firms generate a lot of information. Reporting parties are required to report the notional values traded on an asset class and security basis, which can be used to discover their most popular instruments. This can help businesses to improve their risk management processes by targeting areas that will have the most impact.
Further data generated during the reporting process includes P&L, net direction of positions and the volatility in transaction volumes over time. This can allow firms to drill down and tailor their products to client demand. It can also better inform your firm’s communication and marketing strategies, saving you from expenditure on products (especially costly data feeds and server space) with little to no return.
Data driven decision making
The regulatory requirement to report data creates a scenario where a huge amount of data is stored and easily accessible going back many years. It is possible to digest these files and map out trends to identify business trajectory and areas that need improvement.
The necessity to have clean, accurate and organised data either held internally or with a delegated third-party provider helps firms ensure they have a sophisticated data management system that allows analysis in a much more time efficient manner. The availability of this warehouse of information allows our clients to monitor trends in their key metrics through time and their areas of growth.
Spot Your Weaknesses
Often the process and discipline of producing daily data exports can identify deficiencies that, once rectified, can deliver improvements in other parts of the business. The ability to produce daily reports enables to you to determine inadequacies in both your internal and outsourced processes. Resolving them will lead to improved efficiency and accuracy of your reporting as well as reduce the burden on your compliance resources.
Stay Competitive in a Growing Market
As trading platforms such as eToro and Robinhood continue to enter the market with ‘zero brokerage’ and ‘payment-for-order-flow’ investing structures, it’s becoming increasingly difficult for traditional brokers to compete. Although regulatory reporting is complicated, it’s also a barrier to entry for many new brokers. This means established brokers with concrete compliance frameworks and regulatory reporting processes will face less competition minimising the potential loss of clients to new competitors.
Eliminate Unnecessary Losses
Utilising Best Execution monitoring can help identify transactions that indicate scalpers or significant slippage, allowing you to take relevant action early to eliminate the associated financial losses.
TRAction’s Best Execution Monitor is a smart system that collects, analyses and compares your transaction data against market reference data to compute representative benchmarks that enable consistent and fair evaluation of performance. You are able to quickly and effectively identify a trade execution that is outside of your execution parameters and market prices.
If you would like a demo of our Best Execution Monitor, want to further discuss how regulatory reporting could benefit your business or are looking for a delegated reporting solution, like TRAction, please do not hesitate to contact us.