The Next Generation of Regtech Innovation
AQMetrics recently won the Most Innovative Technology Firm Award at the 2022 HFM US Services Awards for its innovative regtech platform. In this blog, AQMetrics sets out how it's moving forward with even more innovation throughout the remainder of 2022, into 2023 and beyond.
Facilitating effective use of data
AQMetrics exists because its core objective is to deliver technological innovation in a single regtech platform. This can only be achieved through ongoing and relentless innovation. The overarching aim is to enhance the access to and quality of data and information in a single regtech data hub. In 2022 AQMetrics created its no-code auto data mapper and data manager. This tool revolutionizes the way investment and asset managers overcome the age-old challenge of data management and provides the regtech single data source solution that the investment and asset management industry has been seeking for some time. The next steps for AQMetrics in this area of data management innovation are the integration of the data mapper and data manager with the AQMetrics no-code rule engine. This innovation is planned for 2023.
Information technology process innovation
Under MiFID II AQMetrics continually innovates to ensure the availability and integrity of transaction data provided to NCAs for market monitoring. In 2023, ESMA will focus its supervisory activities on monitoring the adherence to regulatory requirements in terms of consistency, completeness, timeliness and accuracy of the data. ESMA will focus in particular on the level of operational separation of the Data Reporting Service Providers (DRSPs) from other lines of business, the implementation of cloud solutions by the DRSPs as well as the adequacy of the information security controls. As a result AQMetrics, as a DRSP, will further innovate its information technology processes.
Cybersecurity
ESMA’s mandates under the Digital Operational Resilience Act (DORA) include a feasibility study for the development of a system for centralizing major ICT-related incidents reporting, the preparation for the oversight function foreseen for the three ESAs, and the development of several technical standards, guidelines and reports. The mandates will be delivered in 2023 and in 2024 and as a result asset and investment managers will need to focus on finding solutions for ICT risk management, incident reporting, threat-led penetration testing, and third-party risk management. AQMetrics is actively innovating in this field to ensure that its customers have the tools required to comply with DORA on an ongoing basis.
Emerging regulatory change
It is anticipated that a slew of regulatory reporting changes is planned for 2023 and 2024 across the United States, United Kingdom, Asia and Europe.
In the United States, proposed revisions to Form PF will oblige large hedge funds to inform regulators of any significant stresses facing their firms within one day of them occurring. As Advisers dually registered with the SEC and the CFTC can no longer satisfy certain CFTC Form PQR filing requirements by filing Form PF, AQMetrics has spent time in 2022 innovating in this space. With the U.S. Commodity Futures Trading Commission (CFTC) approved amendments to Form CPO-PQR, and alignment of the NFA amendments to its Form PQR, the AQMetrics product roadmap includes innovative integration of the new form versions. AQMetrics has also focused innovation efforts on Form 13F changes because the SEC has adopted amended rules concerning Section 13(f) of the Securities Exchange Act of 1934 and associated Form 13F. Form 13F innovations include facilities for each filing manager to disclose its CRD number and SEC file number, if any; the facility to disclose a reported security’s FIGI in addition to its CUSIP number, if required; and rounding to the nearest dollar instead of the nearest $1,000.
Technical Standards, Technical Advice and Guidelines are planned by ESMA in 2023 following the reviews of AIFMD, PRIIPS, UCITS, MMF, EuVECA, EuSEF and ELTIF. As a result, AQMetrics plans to continually innovate its processes for assessing and implementing solutions for regulatory change management in its single regtech platform. AQMetrics also recognises that in 2023, further stress test innovation will be required as ESMA plans to undertake a review of the methodology in the guidelines on MMF stress testing.
Innovations for Sustainable Finance
In 2023, ESMA expects to be mandated to deliver several reports, technical advice and technical standards to support the regulatory framework for sustainable finance. This includes opinions on the new sustainability reporting standards under the Corporate Sustainable Reporting Directive (CSRD), initial work on the first set of technical standards mandated by the proposed Regulation for European Green Bonds as well as regulatory work as required under Sustainable Finance Disclosure Regulation (SFDR).
The anticipated development of European and international standards on sustainability reporting has led AQMetrics to include sustainability reporting into its 2023 product roadmap. AQMetrics recognises that over time there will be supervisory convergence under SFDR, MiFID II, Taxonomy Regulation, CSRD, and the Benchmarks Regulation, and as a result, our innovation in this area means that firms can minimize the impact of convergence on their risk and compliance operations. With further technical standards expected under the European Green Bond Regulation, AQMetrics is gearing up its platform for the ever-emerging sustainability regulations. Integration of environmental risks into the AQMetrics existing stress testing framework is the first step on that innovation path in 2023.
