innovation - The new Regulatory Reporting Hub

Our clients have a say

The latest amendments to the EU Markets in Financial Instruments Directive – known as MiFID II – are the big topic on financial markets these days. The new Directive, aimed at transparency and the detection of market abuse, marks a new high in terms of regulation. Reporting obligations – including those for information which to date was considered irrelevant – are complex and demanding; it is fair to say that many questions will only be answered over time.

Marco Popp

Project Manager, Regulatory Services, Deutsche Börse Group

Marco Popp is part of a larger, Group-wide team working on new products for regulatory reporting.

“Deutsche Börse Group and its clients will have to look into the details,” says Marco Popp from the Market Data + Services division, who is a member of a cross-divisional project group on Regulatory Reporting and MiFID II. “As a market participant, for example, you cannot simply go and report all the data you have generated. This would not be accepted as qualified reporting, and would lead to so-called ‘findings’ – reporting errors which may in turn lead to serious fines. And that is just the reporting side. Many of our clients face additional issues, such as collecting data in-house, compiling and processing it for reporting to the competent authority, having aligned the data to match requirements. We can support our clients across this entire processing chain.”

Everyone concerned – regulators, trading participants, as well as Deutsche Börse – has yet to gain concrete experience with the new rules. Hence, the project team is convinced that a dynamic, cooperative model is the only way forward: “There is no such thing as an optimum, all-in, ready-to-go solution,” Popp says, adding: “Or it would be too late – not exactly ideal either.”

Regulatory reporting

International capital markets are shaped by ever more complex regulatory requirements, such as reporting duties or transparency requirements. Responding to this trend, Deutsche Börse Group has joined forces with various customers to develop an innovative Regulatory Reporting Hub, comprising the Group’s comprehensive range of services designed to fulfil the various reporting duties imposed by different regulators and in different jurisdictions. The Hub will support market participants in their reporting to the various national authorities, taking the respective requirements (which may differ considerably) and other regulations, such as data protection, into account. For participants, this service will provide higher efficiency and lower risks, since they will be able to obtain all the solutions they require from a one-stop shop.

Market Data is a business area of Deutsche Börse Group.

Managed transparency

Popp continues: “We started with a dynamic, collaborative approach, having restructured product development from scratch, in an interactive manner. In short, you could summarise our model as ‘inform – discuss – offer’.” Very short indeed, since this involves a complex process flow with many interdependencies. A method that is currently en vogue came in handy for the team: the “scrum” method uses an open approach where processes can grow alongside the tasks at hand, for as long as possible. After all, it is impossible to define everything from the very beginning. Using this method allowed the team to create transparency – both internally and vis-à-vis clients and other stakeholders – and to manage it appropriately.

MIFID II – background and details

The EU Markets in Financial Instruments Directive – or MiFID – is a directive which sets the legal framework for providing investment services related to financial instruments, such as intermediation, advisory services, trading, portfolio management, underwriting etc. The Directive is applicable for banks and securities firms, as well as operators of regulated markets. Its overarching goal is to promote the integration, competitiveness and efficiency of financial markets in the EU. MiFID II refers to the current revision of the Markets in Financial Instruments Directive, with the objective of making financial markets more efficient, more resilient and more transparent. Besides strengthening investor protection, MiFID II includes new procedural rules for algorithmic trading.

One key objective was defined at the outset: the goal was to establish a dynamic, open platform for comprehensive regulatory reporting. “This meant approaching clients at a very early stage – with contacts not just from the core project team, but also from the Group’s sales teams. We convinced our colleagues to touch base with their clients with a preliminary ‘door opener’ – a very short piece of information.” Of course, an issue such as MiFID II is an ideal opportunity for cross-divisional client contacts, and clients were indeed interested, right from the start. As project manager Popp puts it: “Maybe regulatory reporting is a topic that benefits from a favourable framework right now. But we are indeed proud of the Group-wide team effort we have undertaken in this respect.”

Workshops with all stakeholders

Passing on information and exchanging views was the focus of the second stage. The project team organised workshops, in Germany as well as throughout the European market, with regulators actively taking part as key stakeholders. “We succeeded in building a sound format for an open exchange of views, with Deutsche Börse Group acting as an honest broker.” It was only then that client discussions in a narrower sense kicked in. “Our joint workshops, together with clients and regulators, are a case in point for the responsible manner in which we dealt with our clients – and with our knowledge.” Thanks to this model approach, the team even succeeded in establishing contacts with firms in the UK – an extremely challenging market for non-resident providers of solutions for regulatory tasks.

The pilot phase is running at present. The platform has been launched, with functionality being added step by step. In fact, the first clients are already working on the “live” database: “This is not a prototype version that you would discard after testing – it’s the database to which all functional features will be added over time. There is nothing as valuable as this live feedback.” Deutsche Börse has been discussing planned functionality in detail with interested parties since mid-2015, allowing for customised offers to be requested. The first pilot clients have been online since February 2016.


Various additional services are required in connection with the safekeeping (custody) of assets, including the handling of corporate actions, dividend payments and tax services. Likewise, services to investment funds have gained importance over recent years. All these services are available to market participants from Clearstream, Deutsche Börse Group’s post-trading services provider.

Custody is a business area of Deutsche Börse Group.

Was that it – or will there be more? “Interesting question,” says Marco Popp, “on the one hand, we have already achieved quite a lot – but on the other hand, we are still at the beginning. This is because even though MiFID II might well represent the peak of regulatory activity for the time being, it will certainly not be the end.” Popp firmly believes that the new platform is the right tool for clients’ international business, as well as for future regulation. "Step by step, we will be able to append additional regulations to the platform, conducting live tests with our pilot clients, and adjusting the platform to their respective requirements – true to our fundamental principle of involving all stakeholders into the process.” Deutsche Börse Group thus lives up to its responsibility as a leading market infrastructure provider.

Further information

For more details, please refer to the “Regulatory environment” section of the combined management report in the 2015 financial report.
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