The regulatory burden is increasing year on year and with the mounting threat of fines, financial firms must ensure compliance. Leo Labeis, CEO of REGnosys, explores how firms can implement digital regulatory reporting properly to help and ensure future competitiveness.
Financial Institutions face mounting pressure to stay compliant with significant regulatory rewrites across Europe, Japan, Singapore, and Australia last year and further changes are planned in Hong Kong and Canada in 2025.
The number of changes has been coupled with a significant shift in the approach to regulatory enforcement. Regulators have stepped up their scrutiny and imposed particularly costly fines on several banks for failures in trade reporting practices.The stakes are rising for financial firms – spreadsheets, manual workflows and fragmented interpretations are no longer fit for purpose.
ISDA’s Digital Regulatory Reporting (DRR) has emerged as a powerful solution for financial institutions grappling with complex global trade reporting requirements and since BNP Paribas’ successful implementation in 2022, adoption has accelerated, with JP Morgan going live in 2024 and JPX planning to do so later this year.
DRR has provided these financial firms with more consistent reporting, reduced costs and stronger operational resilience. For institutions still in the exploration phase and unsure where to begin, the truth is that DRR doesn’t require a giant leap, but it does demand a shift in mindset.
From trend to transformation
The biggest mistake firms make is chasing the solution before understanding the problem. DRR only delivers value when it addresses real reporting pain points such as reporting inaccuracies, high maintenance costs, or unclear audit trails.
The starting point must be a business-led conversation of pinpointing your organisation’s unique regulatory reporting pain points, where time and money can be saved. It shouldn’t be done just because others in the industry are doing it.
Second, DRR isn’t something to build in a vacuum. Its greatest strength lies in collaboration. By joining industry working groups, firms can align with peer interpretations of complex rules and contribute to a shared compliance framework. In an area where no one gains competitive advantage from divergence, mutualisation is a multiplier.That doesn’t mean firms need to go all-in from day one. In fact, the smartest implementations start small. DRR enables a modular approach by asset class, jurisdiction, or even individual data attributes. This makes it possible to define a minimum viable product (MVP), prove value quickly and expand from there.
Too many transformation programmes fail because they aim too big, too late. Regulatory timelines have a habit of interfering with multi-year plans. What’s needed is urgency and energy. A compact, cross-functional team can deliver DRR in weeks, not years. A live MVP tied to an external compliance date will drive momentum and internal buy-in far faster than a long-term roadmap buried in PowerPoints.
The power of a shared data model
A key enabler of DRR is the Common Domain Model (CDM), a standardised representation of trade data, developed to bring consistency across financial institutions. By building on CDM, DRR ensures that firms are not just interpreting the rules in the same way, but also representing their data in a uniform, structured format.
A further benefit of implementing DRR is that it can help firms clean and normalise their trade data, improving data quality across other business processes, not just regulatory reporting.
But while the underlying model is open source, implementation comes from outside – the box. Firms must still map their internal data, integrate DRR with existing infrastructure, and take responsibility for testing, deployment, and production monitoring.
Institutions that succeed with DRR will be those that treat it as a strategic infrastructure play, not just a compliance project. That means investing in the right capabilities through building teams with regulatory and technical fluency or working with partners who can accelerate delivery.
It also means thinking beyond day-one delivery. DRR should be built for ongoing adaptability, with a clear strategy for maintenance, governance, and integration with future regulatory changes.
This is important, as beyond 2025 more updates will be expected by the CFTC and SEC in the US and ESMA in the EU.
Next steps
According to recent market research, the global RegTech market is expected to grow to nearly $86 billion by 2032, having been valued at $12.82 billion in 2023, a sign that the industry is waking up to the power of technology such as DRR to help navigate the regulatory landscape confidently.
Firms that embrace DRR not only achieve compliance but also gain a competitive edge by future-proofing their operations. By starting small, moving quickly, and building strategically, firms can transform their regulatory reporting operating model while positioning it for further CDM-based innovations.
DRR isn’t a trend, it’s a turning point. Firms must consider how it can be implemented to meet tomorrow’s regulatory demands, while also building resilience and strategic competitiveness.
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