Where all quests for compliance begin...

February 11, 2019

 

 

As compliance and regulatory professionals know all too well, in some ways, all roads in the quest for compliance reach the nest of Greek legend: Hydra.

 

In other words, "cutting off one of its heads makes two more grow in its place" - and so the job never really is done, is it?

 

With that, we're always keen to take overarching views on compliance in general and we even like to chime in with organisations who spend time with practitioners on a daily basis and so develop such a view.

 

One of these kinds of individuals is Alexander Regnault, Director at Tradesparent - who we got the chance to ask a few questions on his experiences in the world of compliance in energy trading.

 

As part of Tradesparent, you’ve been helping companies cope with many different
regulations. What has been in your opinion the most challenging implementation so far?
What elements are often overlooked by energy trading companies?

 

One of the main challenges we face in any implementation and definitely those with regulatory focus as well, is the completeness of the information required.

 

 

 

"One source of the truth should be the goal no matter the information requirement."
 

 

Identifying, gathering and validating the right data. There are other challenges as well of course such as interpretation of the rules. What does “near realtime” mean? What is an EE OTC exactly? Is something spec or hedge? To name just a few.
 

What is overlooked in general and also applicable to trading companies is the importance of Data Management or Data Governance and that this requires an enterprise approach, not just handled by IT or the Risk Department or Compliance department dealing with regulatory reporting. One source of the truth should be the goal no matter the information requirement.

 

You’ll take part in a MiFID II discussion at ETRC next month, what have your clients being
struggling with when getting ready for MiFID II – which came into force in January 2018?

 

A combination of factors have caused some stress within organizations dealing with MiFID II requirements. For example getting the right buy-in from management to unlock resources to deal with this challenge. Another is gaining clarity on the rules and translating that into a proper reporting framework.

 

You’ve said in interviews that getting your data right is an essential starting point for
complying with regulations. What would be your top 3 advice to achieve the quality of data
required when reporting?

 

Data, data, data indeed. Not only for complying with current regulations, but also to be able to adapt to changing reporting landscape.
 

 

 

"Involve IT as they will be an important facilitator in data gathering, IT governance, etc. However don’t leave it all up to IT."

 

 

 

Number 1 advice therefore would be to build a one source of the truth database as complete as possible with all derivatives included even if some don’t have an impact on any current regulations.

 

Number 2 advice would be to stick to advice #1.

 

Number 3 is to make sure that any work in this field is a combined multidisciplinary project between the business and IT. Involve IT as they will be an important facilitator in data gathering, IT governance, etc. However don’t leave it all up to IT and as a subject matter expert and ultimate responsible party stay very engaged in the decisions around business rules, reporting framework, etc.
 

Final advice is that this is not a one time set up exercise. Quality position data which underlies complete compliance reporting requires constant monitoring, checking, validation. Hence full ownership across the data supply chain.

 ABOUT ALEXANDER REGNAULT:

 

Director and President of TRADESPARENT Inc, has hands-on experience in corporate strategy, finance, risk management, compliance, planning and trading operations. Alexander´s area of expertise lies in the management of projects in these fields and the design and implementation.  As one of the three Management Team members at TRADESPARENT Alexander leads the group operations, project delivery and the Americas.

 

Together with TRADESPARENT, Alexander has recently, successfully launched a new business line for regulatory monitoring and reporting. He completed the roll out at a Fortune 500 company and has presently implemented this solution for the leading companies in the Agri and food industry.   

 

 

 

Keen to further explore matters such as data in such a context? Alexander will be speaking at ETRC on the topic of MiFID II - specifically a 1-year-in review.

 

Take a look at what's on the prgramme at ETRC here

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