2024 has been a transformative year for the regulatory landscape marked by major updates to trade reporting rules across the globe. Leo Labeis, CEO of REGnosys, reflects on the year and discusses how firms can harness RegTech solutions to stay prepared for ongoing regulatory evolution.
While some will remember 2024 as “the year the world went to vote” with more voters than ever in history headed to the polls representing a combined 49% of the world population – those of us in RegTech will remember it as a year of sweeping changes to trade reporting rules across the globe. Like the elections, these regulatory updates saw radical changes and shock results.
Several reforms to global reporting regimes reached their compliance deadlines, culminating in the APAC region. In October, Singapore’s Monetary Authority (MAS) and the Australian Securities and Investments Commission (ASIC) went live with their respective rewrites for the reporting of over-the-counter (OTC) derivatives.
This followed substantial reforms across other regions, including changes led by Japan’s Financial Services Agency (JFSA), Europe and the UK’s EMIR Refit, and updates to the U.S. Commodity Futures Trading Commission’s (CFTC) Rewrite.
With regulatory rewrites now complete across Europe, Japan, Singapore, and Australia, 2024 has undeniably set a new precedent for the scale and pace of regulatory change.
This year has also seen a significant shift in the approach to regulatory enforcement. Regulators have stepped up their scrutiny and have imposed particularly costly fines on several banks for failures in trade reporting practices.
These comprehensive updates and increasing regulatory scrutiny mean financial firms must manage compliance efficiently, underscoring the growing need for innovative solutions to support this complex task.
What do the new rules mean for financial institutions??
Under the governance of the Financial Stability Board (FSB), the Group of 20 (G20) committed to these new regulatory requirements to increase transparency, enhance market stability, and promote harmonisation with international standards.
Key elements of these updates include the adoption of the CPMI-IOSCO committee’s recommendations related to the Unique Product Identifier (UPI), Unique Transaction Identifier (UTI), and Critical Data Elements (CDE), as well as the ISO 20022 XML message format as mandatory components of trade reporting.
Using traditional methods, financial institutions can face significant challenges to implement such sweeping changes. They must navigate complex, overlapping data requirements across jurisdictions, often relying on manual processes to interpret and integrate these changes.
This approach is costly and cumbersome, with the Bank of England estimating regulatory reporting costs for UK banks alone at £2 billion to £4.5 billion annually.
The rise of RegTech?
As a result of these evolving regulatory demands, more firms have turned to advanced RegTech solutions to streamline their compliance processes and reduce costs. This has spurred a surge in RegTech adoption, particularly for regulatory reporting. According to Grant Thornton, 65% of regulated firms expected increased obligations in 2024, with regulatory reporting among the top five areas prioritised in RegTech budgets.
ISDA’s Digital Regulatory Reporting (DRR) initiative has proved critical in this shift toward digital-first compliance. By providing a standardised, machine-executable expression of the updated trade reporting rules, DRR enables financial institutions to adherence to compliance best practice by design. This approach minimises inconsistencies and eliminates duplicated costs, positioning firms to respond more rapidly to global regulatory changes.
REGnosys’s Rosetta platform is the first and only reporting solution that implements DRR natively. It empowers firms to collaborate on a shared interpretation of the rules developed in open source under ISDA’s governance. By providing a cost-effective deployment of this industry’s gold standard, Rosetta allows firms to streamline their response to regulatory change and comply with global regulations efficiently.
ISDA extended DRR to five additional jurisdictions this year and its success was awarded as the ‘Best Regulatory Reporting Solution’ by Regulation Asia. This recognition highlights ISDA’s pivotal role in enhancing regulatory standards, promoting financial stability and simplifying compliance challenges globally.
With regulators increasingly adopting data-driven, cross-border frameworks, RegTech is quickly becoming a strategic advantage.
That is why global financial institutions including BNP Paribas, JP Morgan Chase, Goldman Sachs and Standard Chartered are building their strategic reporting solution using DRR.
In 2024, REGnosys also expanded its collaboration with DTCC’s Global Trade Repository (GTR), allowing Rosetta users to access GTR’s testing environments and prepare for upcoming changes. This collaboration enables firms to update automatically as regulations evolve, avoiding the need for costly system overhauls and the risks associated with outdated platforms.
The future of compliance?
Looking ahead, new regulatory updates are planned to go live in Canada and Hong Kong in 2025. Beyond 2025, more updates are also expected by the CFTC and SEC in the US and ESMA in the EU.
In a year defined by regulatory transformation, firms that embrace agile RegTech solutions not only achieve compliance but also gain a competitive edge by future-proofing their operations. It demonstrates the power of adaptable platforms that leverage industry collaboration, enabling financial institutions to navigate the regulatory landscape confidently while focusing on growth and innovation.
In the constantly evolving world of regulation, firms that invest in forward-thinking compliance tools today will not only be best positioned to meet tomorrow’s regulatory demands, but they will build resilience and strategic competitiveness.
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