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Harmonising Regulatory Reporting with Your Firm’s Business Operating Model


Harmonising regulatory reporting with your firm’s business operating model. Q&A with Cathal Connolly, Head of Global Regulatory Reporting at AQMetrics.


What can firms do to ensure regulatory reporting accurately reflects the firm’s business operating model? We sat down with our head of global regulatory reporting, Cathal Connolly, to learn more.


How has regulatory reporting evolved over the last 5 years?

When regulatory reporting was launched, investment managers’ sole focus was on meeting their reporting obligations, without necessarily reflecting their own firm’s methodologies. At the same time, many regulatory reporting solutions in the market offered a ‘one size fits all’ approach, which contributed to overly-simplified reporting being widespread. In addition, manual manipulation of data and overrides were common in early filing periods.This was acceptable on a short-term basis, but it is not sustainable from an audit and best practice perspective. There is a growing need for personalisation today which is driven primarily by the huge degree of variance in investment managers’ strategies. For example, managers will have differing views on what they classify as borrowing or what is deemed to be unencumbered cash. In addition, if a manager has a short position, it might be deemed as borrowing or there might be enough long cash to counteract it.


What type of considerations are firms making when putting outsourcing arrangements in place for regulatory reporting?

I would recommend that the firm’s business model be reflected in the regulatory filings and the reporting processes itself. Any outsourcing arrangement should be a partnership, where the outsourced party can bring both funds industry domain knowledge and industry best practices. The reporting platform should be flexible enough to accommodate manager or fund-specific methodologies. This removes the need for manual data amendments and saves the investment manager time, effort and potential errors in the regulatory filing process.


How can the use of workflow enhance the regulatory reporting process?

A regulatory reporting platform should offer workflow that is aligned with the investment manager’s business processes.Large investment managers will typically have separation of duties in the preparation, review and sign-off of the regulatory filings. Workflow should be intuitive, and enhance the review and sign off process. Audit trails are important for tracking critical path activities.


What is your best advice to firms on regulatory reporting?

Regulatory reporting does not have to be a manual, time-consuming process that distracts from a firm’s core activities. Outsourcing arrangements can work particularly well when the outsourcing partner takes the time to the understand the firm’s business model and is proactive in offering industry best practice advice. A regulatory reporting platform should eliminate the need for manual data amendments and have a streamlined workflow which then allows investment managers to retain control of their regulatory filings with minimal disruption to their business.