With unprecedented scrutiny and pressure from regulators and competitors, market participants face several challenges ensuring their OTC and ETD portfolios are synchronized between counterparties. First, regulatory rules are often open to interpretation, which causes data discrepancies. Second, as firms try to normalize their datasets, they face increasing regulations and multiple data format requirements. Finally, while regulators are working toward a common standard, it is unlikely to happen anytime soon. These issues are causing an increasing number of unmatched trades, which requires costly manual intervention to remediate.

Because match rates have become an important KPI for both regulators and financial entities, many firms have turned to existing recon systems not built to handle today’s regulatory complexity or a manual approach that relies on spreadsheets and other rudimentary tools, which becomes unwieldy as volumes rapidly increase.

Neither method is sustainable due to the growing number of and disparity between regulations as well as other key challenges:

• Firms have increased budget and staff involved in reconciliations over the last two years, as Figure 1 highlights.

• Many factors make the reconciliation function challenging, with regulatory and compliance, risk and control oversight and ETL/heavylifting and manual support comprising the top three, as shown in Figure 2.

• The average time to analyze, build and test a new reconciliation is more than two months, as illustrated in Figure 3.

Figure 1: Types of Reconciliation Support Investment Over the Last Two Years

SAPIENT CMRSSM REGRECON

Centralizationproject

Increased investment

in dedicated in-house

technology

Increase in dedicated

staff

Process rework via consulting services

No investment

made

Increased investment

in dedicated vendor

technology

53%

41% 38%

22%

14% 11%

Source: Aite Group’s survey of 82 individuals engaged in reconciliation processes, 2015 Source: Aite Group’s survey of 82 individuals engaged in reconciliation processes, 2015

40%

36%

35%

35%

25%

25%

21%

21%

Time to market for new reconciliation

Nonstandard data support

Lack of automation

ETL heavy lifting/manual support

Risk and control oversight

Regulatory and compliance pressure

Audit

Client pressure

Source: Aite Group’s survey of 82 individuals engaged in reconciliation processes, 2015

Source: Aite Group’s survey of 82 individuals engaged in reconciliation processes, 2015

Figure 2: Main Pressures Facing Reconciliation Function

Source: Aite Group’s survey of 82 individuals engaged in reconciliation processes, 2015

Total: 64.4 days

Build: 25.67 days

Analyze: 23.87 days

Test: 14.86 days

Figure 3: Average Time Taken to Analyze, Build and Test a New Reconciliation

An Innovative Approach to Trade Matching and ReconciliationSapient Global Markets has addressed these challenges with its Sapient CMRS RegRecon trade reconciliation solution. Available as a stand-alone solution or as part of Sapient Global Markets’ award-winning CMRSSM reporting platform, RegRecon provides an automated approach for trade matching and reconciliation, break management and resolution workflow for valuation and material terms. Purpose-built for today’s regulatory transactions, RegRecon runs reconciliations according to regulation-specific rules and supports flexible, standard file formats. It is seamlessly scalable and the only regulatory reconciliation solution to come with out-of-the-box connectivity to trade repositories (TRs), approved reporting mechanisms (ARMs) and national competent authorities (NCAs), which minimizes the length of onboarding. Plus, it is continually enhanced with rules for new and changing regulations.

Part of Sapient Global Markets’ suite of capabilities to meet the evolving demands of regulatory reporting and compliance, RegRecon provides a high rate of matches without the need for manual intervention. It also enables you to verify transaction trade details before payment or calculation methodology disagreements, helping to eliminate time-consuming and costly dispute resolution. Ideal for any size firm, RegRecon seamlessly scales to support large volumes of trades and can process up to 6 million records in 4 hours, and soon will support 16 million records in 4 hours.

Figure 4: Firms can view reconciliations based on a number of criteria, such as date.

Figure 5: Firms can easily see which trade data was not reconciled.

Figure 6: RegRecon data as shown through CMRS RegInsights, another element of Sapient Global Markets’ award-winning CMRS reporting platform.

Key BenefitsSapient Global Markets continually invests in RegRecon to provide you with a cost-effective and scalable solution for trade reconciliation to help you:

By improving reporting accuracy, RegRecon mitigates the risk of non-compliance, while also saving time, money and effort.

• Mitigate the risk of non-compliance and avoid fines and negative publicity

• Reduce the time spent on reconciliations through comprehensive workflow support and high processing speeds

• Lower the TCO through a unique cost model that is based on the number of regulations, TRs / ARMs / NCAs users you want to connect to and overall volumes flowing through instead of number of reconciliations

• Continually improve the regulatory transaction reporting process by providing unprecedented visibility and transparency which helps you to identify issues such as low match rates

• Maintain control over your data and the entire reporting process by ensuring visibility into the trades being submitted by counterparties

• Minimize reporting costs and enable efficiencies through automation

Reg Recon Functional Support

Regulations

• CFTC• EMIR• ASIC• MAS• Canada• HKMA• JFSA• SFTR• SEC - SBSR• Israel• MiFID II

Approved Reporting Mechanisms / Trade Repositories

• DTCC• UnaVista• REGIS-TR• CME• ICE TV

Figure 7: Sapient RegRecon supports a growing list of regulations, ARMs and TRs.

A number of indicators show that reconciliation has risen in importance as a function within financial institutions over the last few years.

Aite

Features at a Glance• Manages reconciliations for trade, collateral and reference

data

• Provides automated regulatory trade reconciliation between book of records, counterparties and TRs

• Matches self/delegated/third-party trade reporting and counterparty trade reporting at TRs/ARMs (e.g., ESMA)

• Integrates break management and resolution workflow for valuation and material terms

• Provides a unified, flexible user interface for USI/UTI matching

• Makes workflows easy to analyze with role-specific dashboards

• Provides mapping and configuration with customizable matching criteria

• Delivers progress summary reports for managers and regulatory dispute reporting

Used out-of-the-box or configured to meet specific requirements, RegRecon offers:

• Greater Control—RegRecon helps you minimize risk by maintaining control over your data and the entire reconciliation process

• Lower Total Cost of Ownership (TCO)—Because it easily scales to accommodate new regulations and connectivity to new intermediaries, RegRecon helps you lower your TCO for regulatory reconciliation

• Reduced Costs—RegRecon’s workflow support replaces manual tasks with an automated approach, which reduces the BAU costs associated with trade reconciliation

FEATURES AT A GLANCE

ABOUT SAPIENT GLOBAL MARKETSSapient Global Markets, a part of the Publicis.Sapient digital transformation platform, is a leading provider of services to today’s evolving financial and commodity markets. We offer services and unique methodologies across business consulting, user experience, operations, program management, technology development and solutions. Fusing creativity, technology and industry expertise, we enable our clients to grow and enhance their businesses, create robust and transparent infrastructure, manage costs, and foster innovation to their customers and throughout their organizations. Sapient Global Markets operates in key financial and commodity centers worldwide, as well as in large technology development and operations outsourcing centers globally. For more information, visit www.sapientglobalmarkets.com.

For more information, visit www.sapientglobalmarkets.com.

© 2016 Sapient Corporation.

Trademark Information: Sapient and the Sapient logo are trademarks or registered trademarks of Sapient Corporation or its subsidiaries in the United States and other countries. All other trade names are trademarks or registered trademarks of their respective holders.

Sapient is not regulated by any legal, compliance or financial regulatory authority or body. You remain solely responsible for obtaining independent legal, compliance and financial advice in respect of the Services.

Reg Recon License (On premise) Reg Recon SaaS

Support for Regulations Included Included

Connectivity to TRs/ARM Included Included

Managed Services

Operations Available Included

Infrastructure support Available Included

Hardware Available Included

Software Available Included

Data integration source system to CMRS XML/CSV XML/CSV

Pricing Perpetual time license/annual maintenance fees Annual volume based fees

Software Instance Not Applicable Dedicated per client

Figure 8: Sapient RegRecon is available as a cloud-based solution or local installation.