Regulatory Reporting Solutions

The Money Market Funds Regulation (MMFR) was introduced to enhance transparency for National Competent Authorities (NCAs) by mandating detailed reporting for all UCITS and Alternative Investment Funds (AIFs) that are established, managed, and marketed within the EU, and which invest in short-term assets:

Article 37 Reporting demands a comprehensive portfolio breakdown, including liquidity, maturity of instruments, collateral for derivatives, and specific risk metrics like stress tests. The level of detail required makes the process complex, as you must provide a full picture of fund risks and exposures.

Daily CBI MMFR Reporting is a time-sensitive requirement that monitors the evolution of Net Asset Value (NAV), subscriptions, redemptions, liquidity, and deviations from NAV on a daily basis. Reports must be produced and submitted by 2 PM Irish time (3 PM Luxembourg time) for each trading day.

Key challenges

• High-volume of granular data: Both Article 37 and Daily CBI MMFR require detailed portfolio breakdowns to be submitted to the regulator within a short deadline.
• Shifting regulatory demands: Guidelines from the NCAs are constantly evolving; you are expected to stay informed and adapt quickly to any new change in reporting standards.
• Daily filing: For the Daily CBI MMFR, strict submission deadlines require precise coordination to ensure they are produced, validated, and filed within a few hours.
• Stringent standards: Both reports demand high levels of data integrity; frequent quality checks must be carried out to prevent errors in risk metrics and regulatory submissions.
• Cross-coordination across teams: Inputs from risk management, operations, and portfolio teams must be consolidated efficiently.

Since 2021, Switzerland’s supervisory authority, FINMA, has conducted annual data collection from funds exceeding a threshold of CHF500 million (or those that exceed CHF500 million and are using alternative strategies for foreign funds); this excludes smaller funds that have no significant impact on system stability.

The CIS Reporting targets all financial intermediaries, banks, and securities firms that manage foreign funds. With a focus on exposures, leverage, liquidity, and counterparty risks, FINMA CIS Reporting aims to enhance supervision quality and identify systemic risks. This report faces challenges similar to the AIFMD Annex IV.

Key challenges

• Evolving requirements: Driven by changes in market conditions, FINMA regulations might be updated on a regular basis.
• Diverse data sources: Internal financial systems, external market data providers, transaction records, customer information, etc., must be carefully managed.
• Complicated risk computations: A high volume of risk metrics is required, including Value at Risk (VaR), stress testing, liquidity risk, and credit risk evaluations, all which demand strong financial models and data analysis tools.
• Strict deadlines: The complex reporting process, coupled with rigid regulatory deadlines, demands constant monitoring and precise execution to avoid regulatory-gap risks.
  

The UCITS Risk Reporting is a semi-annual regulatory requirement for Undertakings for Collective Investment in Transferable Securities (UCITS) that are domiciled in Luxembourg. It was introduced by the CSSF in 2016 to address gaps in risk-related data.

Key challenges:

• Extensive data points: The report has eight sections, including investment strategy, exposure, stress testing, liquidity, and credit risk, with more detailed reporting required for funds exceeding €500 million in assets or using leverage higher than 30%.
• Tight deadlines: The UCITS Risk Report (URR) must be submitted within six weeks of the reference period, covering data analysis, risk metric calculations, and final submission.
• Complicated follow-up: The CSSF may request further clarifications or demand quarterly Value at Risk (VaR) and Leverage reports requiring extra resources.
• Shifting requirements: CSSF regulatory guidelines are frequently updated, making it difficult to keep up and respond in a timely manner.

From highly developed financial hubs to more nascent emerging markets, the APAC region is aligning its policies with international standards. This dynamic and fragmented market presents both common and unique reporting challenges.

Key challenges:

• Stringent standards: Regulatory bodies like the Securities and Futures Commission (SFC) in Hong Kong require rigorous reporting that aims improve transparency in the funds industry and mitigate systemic risks.
• Complex data management: To meet these reporting standards, firms must carry out complex processes to source diverse data from multiple stakeholders.
• Resource-intensive processes: Investment funds operating across APAC must provide detailed information on portfolio composition, strategies, and specific breakdowns by asset class, currency, and geographical exposure.
• Various reporting deadlines: Deadlines range from daily to annual reporting frequencies, depending on the report and the country.