Centralised Data Management and SFTR Reporting

Background:

Our client, a large Swedish Bank, wished to implement a centralised data management and data distribution system as part of their business requirement to set up an in-house data management function.

The client was receiving security data from several market data providers and some attributes were being maintained internally in multiple data repositories. This was causing data issues, as there was not a single consistent repository for the instrument data that could be shared across all the client’s internal systems.

Maintaining the data quality across the different repositories was also proving difficult with the need to deploy individual data fixes several times. The resultant multiple requests for the same security data attributes were also causing the client to incur higher costs from the data vendors than would otherwise be the case if they had in place a centralised data management system.

Alongside this requirement, the Securities Financial Transactions Regulation (SFTR) requires investment firms to report their SFTs to a Trade Repository registered by ESMA.

The initial deadline to be compliant was set as Quarter 2, 2020. The European Securities and Markets Authority (ESMA) is the European Union’s securities markets regulator. Our client required the centralised data management system to be the sole provider of data to the Trade Repository.

Products in scope for SFTR are Repos, Buy-Sell-Back and Securities Lending. The required counterparty, instrument and life cycle data for each product was to be sourced from Opus, Kondor and Calypso and made available to the centralised data management system via an event bus architecture.

The following goals were set for this project:

  • Enable centralised data collection and aggregation to provision data to SFTR
  • Build a central system to master security data and operate as a common / single source of truth (‘golden copy’) for all tradable instrument data across the client’s organisation
  • Mastered data to be distributed to all consumers in a controlled and managed protocol across the client’s various divisions
  • Improve transparency of data usage across the client by auditing all requests for information – e.g. from Bloomberg
  • Build a data management team and introduce data governance policies, utilising the data management application to ensure data quality across the organisation.

Reformis Solution

A combination of Reformis, IHS Markit and client resources based in different countries and locations within those countries, worked together in an agile delivery approach to deliver this complex project in time to meet the regulatory demands.

IHS Markit EDM was chosen by the client as it comprises a flexible data management platform that allows them to integrate their application data from multiple sources into a centralised data hub.

Markit EDM creates consistent versions of the truth (‘gold copy’ mastered data) in a fully traceable, audited environment. It allows the client to apply data quality control rules to assess the validity of the data before related attributes are matched, to create side-by-side views across all the sources and data masters. This gold copy data is then available to distribute to both upstream and downstream systems, reducing operational risk.

Key deliverables on this complex project included:

  • Implementation of a best practice-based security master including data loading, matching, mastering and export functionality – all fully visible and surfaced in the user interface workflow, allowing data interrogation, attribute overrides and data quality analysis. The asset classes included fixed income (primarily bonds), multi-listed equities, repos.
  • Implementation of an initial party master for the client’s counterparties, again with a full user interface presented via an internal web site.
  • Mastering of Trade data (including valuations and collateral data), loaded and exported to the SFTR application in real-time utilising Straight Through Processing (STP).
  • Implementation of Bloomberg request + response process to enrich the security master and trade ‘gold copy’ data. This was built to both run as ad-hoc and a nightly scheduled process.
  • Housekeeping of files, store table and audit data.
  • Loading of both full and delta FIRDs XML files for trade data enrichment – FIRDs is the Financial Instruments Reference Data System used by ESMA.
  • UI Dashboard to allow interactive process monitoring, reconciliation of EDM and SFTR application data sets via a bespoke ack-nack process.
  • Data load and validation exceptions management
  • Dashboard to allow visibility and analysis of data lineage and change auditing

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