OpRisk Awards 2016
There aren't many people who quietly welcome each new reporting regime, or every amendment, review or technical refinement imposed by the world's regulators on the increasingly burdened financial services sector. But for Chris Bates, co-founder of transaction-reporting provider Abide Financial, each new regulatory wrinkle makes the business case for its managed service a little bit more compelling.
"We've got more regimes landing. The requirements we have are being rewritten, and there are greater regulatory demands for accuracy and to prove the completeness of the data submitted," he says.
"Even in a sedentary environment, it was a challenge," says Bates, referring to Abide Financial's early roots in providing an outsourced solution to reporting under Europe's Markets in Financial Instruments Directive (Mifid). Now, with a growing multitude of reporting regimes around the world, things are a lot more complicated.
"This is a huge cost base and a huge risk for firms. Any vendor that can share some of this pain, help clients navigate through this, and perhaps allow firms to redeploy staff into profit-making activities, is a no-brainer."
Along with the hub, we provide a service wrap that enables us to protect clients against regulatory change. It's not only about going live with a regime – it's about managing the incremental changes we'll see within those regimes post go-live
Chris Bates, Abide Financial
London-based Abide Financial aims to offer an end-to-end regulatory reporting service, combining a multi-regime transaction-processing hub with advisory support to help keep clients abreast of the changing landscape.
A big part of the value proposition lies in Abide Financial's transaction-processing hub, which can take often-unstructured transaction data and transform it – on a field-by-field level – into accurate, validated reports that can be submitted to regulators on a T+1 basis, says Bates. "That's where a lot of our efforts are directed at the moment."
The hub, in particular, can handle new regimes or changes to existing ones without necessarily forcing clients to revisit their data-delivery systems or processes to manage the complexity.
But Bates stresses the service is about much more than simply providing data aggregation. "Along with the hub, we provide a service wrap that enables us to protect our clients against regulatory change. It's not only about going live with a particular regime – it's about managing the incremental changes we'll see within those regimes post go-live."
Over the last three years, Abide Financial has captured a 24% market share in Mifid reporting by volume, and is now the third-largest manager of trade reports under the European Market Infrastructure Regulation. Along the way, it has attracted a strategic minority investment from London-based broking giant Icap.
Room for growth
Bates is confident there is room for significant growth, with even the largest firms recognising there is merit in outsourcing reporting to specialist firms such as Abide Financial.
"We're seeing a need for clients to be able to manage their global reporting requirement in a centralised and co-ordinated way, to ensure they meet their obligations, and avoid unnecessary investigation and fines in whichever market they are operating in. Addressing that complexity is where we see the market going," he says.
"Vendors that aren't innovating around that will become utilities," he adds. "There will be a place for those types of vendors, but the strategic ones will be investing in the hub protocols that allow for their clients to execute multi-regime reporting in a simpler way."