Do you struggle to keep up with the number of ESMA Q&As?
Since MiFID II was published, ESMA has published just over 450 Q&As relating to the regulation and directive.
Keeping up to date and considering all ESMA Q&As is a challenge for Compliance and Regulatory Change Management teams.
For example, take Article 35 in MiFID II on the establishment of a branch or using a tied agent to provide investment services to clients. This Article is associated with two Level 2 instruments: a Regulatory Technical Standard (RTS) and an Implementing Technical Standard (ITS) and seven Level 3 Q&As and guidance documents.
The below rule map, extracted from the Single Rulebook platform, displays the relationships and interconnectedness between the Article, the RTS and the Q&A documents in one simple visual. For regulated entities and clients, all of the documents apply and are highly relevant.
Regulatory Conduct professionals, Legal teams and Compliance Managers need to be confident that they have considered all ESMA Q&As. Although this sounds obvious, it’s a real challenge not only to keep up with the number of Q&As but also to easily search and find the related documents.
Search, navigate and create a regulatory inventory for important rules and guidance that relate to your firm
With new guidance documents and Q&As published regularly, it is easy to miss a new Q&A, creating operational and regulatory risk for Compliance and Legal teams, as well as Front Office and Execution desks.
The functionality to search and navigate regulatory texts and see all associated guidance documents, including ESMA Q&As, is invaluable for Regulatory and Compliance professionals.
Adopting regulatory compliance management software such as Single Rulebook into processes and workflows allows users to navigate between documents easily, without losing the context and location of the document that they are working on.
In-house lawyers and external counsel also need a deep understanding and interpretation of regulation and how it has changed, in minute detail. This includes annotating and tracking how regulation has changed through time.
Single Rulebook is a regulatory knowledge platform. It offers digital tools such as visualised rule maps, powerful search, a Q&A mapping algorithm, tailored rule update alerts and collaboration tools to make working with complex regulation easier to manage.
Please get in touch to request a demo or to find out more.
More than half of respondents in a recent survey we ran said they still rely on spreadsheets to share regulation and regulatory opinion in their organisation. This shows the challenges of working with regulation that still prevail in compliance and operations departments within financial firms, despite the emerging prevalence of RegTech.
In a constantly evolving world where technology is part of every aspect of our lives, regulation is no exception. RegTech is expanding all the time and while many systems are currently isolated, going forward we will see RegTech systems interacting with one another in an automated fashion in order to provide a more efficient and competitive way of working.
“RegTech is growing at a phenomenal rate and it’s going to empower the industry.”
Dario Crispini, CEO, Kaizen Reporting
With manual processes largely removed and digital rules and interpretations accessible across systems, RegTech will ultimately help improve accuracy and confidence in the compliance of an organisation.
During a recent webinar discussion between Single Rulebook and Kaizen Reporting we discussed the potential transformation that RegTech and digitisation may bring about in compliance and operations.
We also conducted two audience polls to canvas opinion on how the industry is currently working with regulation and regulatory text today:
Poll 1 Question & Answer:
How do you currently share regulation and regulatory opinion within your organisation?
- Spreadsheets (51% of responses)
- Email (38% of responses)
- Paper / hard copies (7% of responses)
- Software solution (4% of responses)
Poll 2 Question & Answer:
What do you think is the average tenure of a regulatory advisor in your firm?
- Less than a year (19% of responses)
- Between one and 2 years (22% of responses)
- Between 2 and 5 years (48% of responses)
- More than 5 years (11% of responses)
Both poll results provided valuable insights into how the challenges of regulation remain within compliance and operations. Using spreadsheets and email to share regulation and regulatory interpretations lead to poor governance and no audit trail. Spreadsheets have to evolve as the regulation evolves and emails are easily lost when someone leaves a firm.
The retention of regulatory experts within an organisation poses a unique challenge itself. As people move on, so does the regulatory knowledge and interpretation of rules that they have accumulated. This can be a real loss and a real challenge for both Compliance professionals and the organisation as a whole.
“With an integrated system, not only can regulatory knowledge and interpretations be retained, they can also be embedded into a firm’s own systems, policies and controls.”
Wim Nelen, CEO, Single Rulebook
If you wish you receive more information on this topic, please feel free to contact us.
With its sophisticated rule mapping system, Single Rulebook matches each new UK regulation with the corresponding EU rule in an easy to follow rule map. For example, take RTS 8 in MiFID II. Our visual rule map takes you directly to the new and corresponding UK rules (MAR 5 and MAR 7) and with one click, you can go straight to the new UK regulation.
Rule maps provide visual guidance on interdependent regulation for every single article, allowing users to understand correlations and relationships between regulatory rules without leaving the platform.
If you need help navigating regulation in a post Brexit world, please contact us.
Formed in 2013, Kaizen Reporting provides services for regulatory reporting including assurance and shareholding disclosure services. They comprise a team of highly skilled regulatory and technology specialists on a mission to transform the quality of regulatory reporting in the financial services industry.
Kaizen’s multi-award winning ReportShield™ delivers quality assurance services which are unique in providing full visibility of reporting quality. The company’s services are used by some of the world’s largest banks, asset managers, hedge funds and brokers.
Single Rulebook allows you to search, share and manage complex regulatory rules on one digital platform. It will enhance Kaizen’s regulatory offering, providing value added services to clients struggling to cope with the burden of ever changing regulatory rules.
If you would like more information, or want to talk to one of our specialists, please contact us.
Author: Wim Nelen
As singlerulebook.com is shortlisted as the Best Data Solution for Regulatory Compliance in the Data Management Insight Awards, it seems a good opportunity to explain how singlerulebook.com provides programmatic access to regulation and how that enables digital transformation of regulated firms.
The core dataset of legal and compliance work is formed of regulatory requirements. The requirements typically come from a wide variety of different sources and they evolve all the time. They get interpreted and applied within a constantly evolving body of policies, processes and systems. This is the control framework for which designated individuals are held accountable.
What senior managers and other accountable staff need is traceability to regulation, and assurance that controls based on regulation are sound and properly maintained.
Programmatic access to regulation provides this traceability, makes the control framework much more efficient and removes error-prone manual steps. Regulatory change programmes typically start off with copy pasting paragraphs of regulation into a spreadsheet. It is an almost impossible task to keep track of shared artefacts of constantly evolving regulatory requirements within different spreadsheets and different business requirement documents across a complex regulated firm. Accessing regulation via an API will put all staff, systems and processes on the same page, making the control framework more effective and efficient.
Moreover, programmatic access to regulation is the cornerstone of digital transformation. How do you maintain a bot that has automated a specific legal or compliance process? By feeding it with auditable updates of regulatory requirements.
singlerulebook.com provides programmatic access to regulation. It uses Natural Language Processing and deep learning to aggregate, standardise and pre-index a constantly updated digital feed of regulatory data. singlerulebook.com users can easily integrate regulation with policies, systems and controls. The service effectively allows you to bootstrap traceability with regulation onto any existing policy, process or system.
If you wish you receive more information on this topic, please feel free to contact us.
Author: Chris Dingley
The financial services industry continues to rely on horizon scanning tools + spreadsheets to manage regulatory change. Can we now say that tools exist that will promote organisational change?
Regulations change continually from initial drafting, through implementation and via further rules changes and guidance when they are in force. Regulation is maintained in many different formats and locations, creating complexity to analyse texts across regulations. To solve this problem, software will need to digitise and structure texts.
It is very uncommon for a firm to be able to establish traceability and robustly link their implementations back to the underlying regulation. Traceability to the regulation decreases costs for firms through increased compliance and decreased rework. It benefits individuals from board level downwards who can demonstrate an appropriate level of professional diligence. It also creates the foundation for ongoing automation of regulatory workflows.
Even the smallest firm will have multiple understandings of each regulation. Someone needs to own the house view and make this available across functions and locations. Large organisations struggle to maintain a view on where and how new regulation is implemented. We also operate in an environment where new regulation sits alongside and on-top of old.
The Covid epidemic is the latest cost pressure to hit an industry already dealing with long-term pressures on margins. Cost pressures are now impacting the previously untouchable compliance function. Firms that can see beyond the current paradigm will decrease cost and risk in managing their compliance.
The technology most suited to tackling these problems is natural language processing (NLP). singlerulebook.com is an example of a domain-specific implementation of NLP.
NLP engines allow regulation to be digitised into a graph representation. The graph structure creates and maintains links between regulations that are otherwise hard to track. Changes in texts are identified, contextualised and surfaced by the technology. Digitised regulation is queried semantically, enhancing completeness and efficiency.
Building a specialised workflow for tracking regulation
This creates a robust lineage of regulation. Using links to third party applications creates traceability from regulation to implementation. We now exist in a software ecosystem where software is able to communicate via APIs. Regulations can now talk to business processes via API.
singlerulebook.com uses state of the art tooling and approaches to enhance the depth of benefit that integration with other systems can provide. For example, integrations completed against our graph respond automatically to changes in regulation. There is no “human in the loop” processing and analysis of documents. Changes and impacts are analysed on the same day that they are published. The existing generation of software is typically blind to second-order impacts, as it does not deploy this technology, or relies on human analysis to break down documentation. This approach is both slow and subject to error.
Tool adoption is also determined by processes within firms. So are the organisational barriers to adopting improved tooling insurmountable? Organisational complexity is seen as the key barrier to implementing a traceability tool. For example, adopting tooling will look different at different stages in the lifecycle of a regulation. Doing this at the drafting stage would be ideal, but how does this fit with the mass of already implemented rules that we are dealing with currently?
Interpretation of regulation happens in many places. This may begin with an initial breakdown from a lawyer and end up in the hands of an external developer or junior operations clerk. Understanding where these weaknesses lie helps firms decrease the risk of non-compliance.
Financial services firms must also deal with the large number of joiners and leavers across a project lifecycle. These may be permanent staff or contractors, but in each case a leaver takes away some level of understanding that costs time (and money) to reacquire.
In our recent singlerulebook webinar on the topic of traceability, our panel broadly discussed three key recommendations for improving regulatory change management.
- Lifecycle – track regulations across their lifecycle using software. Where are we applying this regulation? Has the guidance changed?
- Centralisation – ensure the house view is widely available to staff. Have strong policies on ownership for regulatory obligations. Ensure handoff from projects into BAU.
- Embed tooling – ensure adoption of tooling through strong processes to realise benefits. Leave behind a process that proactively reacts to changing regulation
These recommendations show that both technology and process have a role to play in changing how firms manage change. We don’t exclude spreadsheets from this future state – in fact we offer functionality to enhance them.
However, modern regulatory traceability is the foundation to build a new way of working.
With climate/ESG regulation developing, IFR/IFD, CRR 2/CRD V, CFTC reporting, SEC reporting and more upcoming, firms have the perfect opportunity to review how they work with regulation.
If you wish to discuss this further, please contact us.
Watch the webinar ‘Traceability: can regulation be integrated with policies, systems and controls?’
On Thursday 18th of June 2020, singlerulebook.com hosted its inaugural webinar. We brought together senior experts from Standard Chartered Bank, Capco and MarketAxess to discuss data lineage in regulation. Over 1000 people registered for the webinar and we had lots of sparkling interactions between the panelists and the audience.
Did our distinguished panel think that regulation can be integrated with policies, systems and controls? Of course! Did they think that copy pasting paragraphs of regulation in a spreadsheet should remain the paradigm of regulatory change management and compliance? Of course not! It was widely agreed that the only effective way to synchronise ever evolving regulation with ever evolving business and control environments is software automation. It was also very clear that this type of technology is now within everyone’s reach.
Watch the recording of the webinar here to learn more about the challenges and opportunities of regulatory data lineage.
Single Rulebook announced today the launch of an enhanced product offering that will allow users to create two-way traceability between regulatory provisions and in-house policies, systems and controls. The product takes the shape of a no-code API platform, making integration of regulation and controls accessible to anyone.
Traceability and auditability of regulatory policies, processes and records has been regarded as the holy grail in regulatory change management for many years. Integration with regulation makes regulatory change impact assessments exact, comprehensive and instantaneous. It also partially automates compliance activities. Firms can move away from clunky spreadsheet-based processes and reduce their reliance on tribal knowledge.
Wim Nelen, CEO, Single Rulebook, commented: “This opens up a new era of digital compliance to anyone. You can now think about Single Rulebook as an off the shelf product that allows you to bootstrap data lineage with the regulation onto any existing regulatory process or product.”
How does it work?
The traceability product is embedded within Single Rulebook’s existing regulatory knowledge management software. The platform helps clients in financial services and other industries to work more efficiently with regulation and to create a shared digital knowledge base of evolving regulatory interpretations. Single Rulebook uses interactive visualisations to capture the links between different regulatory requirements and in-house interpretations. The platform is powered by proprietary Natural Language Processing software, search algorithms and visualisation tools.
Chris Dingley, Head of Sales, Single Rulebook, said: “Anyone can now create traceability to the rules without the need for a large implementation project. This is a regulatory product manager’s dream. We’ve successfully concluded proof of concepts with a select group of global financial institutions ahead of this launch and expect many new use cases and customers to come forward over the next few months.”
- If you wish to discuss this further with Wim, Chris or another one of our specialists, please contact us.
Author: Wim Nelen
Whenever we meet regulated firms large and small, we’re persistently dumbfounded by the make-do spreadsheet solutions that are used to keep track of regulatory obligations.
We see global banks that copy past rules that apply to them in spreadsheets: ‘the regulatory obligations register’. We see firms spending 6 figures to get a rule mapping spreadsheet from a consultancy. The work product they get is a simple excel sheet that is out of date after two weeks!
Regtech software can clearly do this better. It can identify and track those rules that apply to you on an ongoing basis, it can apply a robust governance model around this process, enrich the source data with your in-house or external regulatory knowledge and feed everything directly into your other systems with a comprehensive audit trail.
This is how we manage your regulatory obligations in singlerulebook.com:
Your regulatory obligation register corresponds to a filter of the regulatory content that we have enriched within singlerulebook. You can thus only see the rules that apply to you, for example by legal entity. We have pre-indexed all rule relationships, meaning that you get a filtered but comprehensive overview of all the relevant regulation, not only the level 1 text but also all the relevant articles in delegated acts, guidance and Q&As.
The regulatory obligations management functionality is fully integrated with singlerulebook.com’s regulatory knowledge management platform. The platform helps clients in financial services and other industries to work more efficiently with regulation and to create a digital knowledge base for the firm by means of interactive visualisations.
All the rules that are in scope for you will be automatically tracked on an ongoing basis. You will receive customised and contextualised alerts whenever there is a reg change impact.
As regulatory implementation more and more evolves towards direct integration of regulation with in-house policies, systems and controls, this automated regulatory obligations filter mechanism will sit between the source regulation, your interpretations of regulation and the systems that we work with the interpretations of the regulation.
- Please contact us to discuss how we can add value to your workflow.
Author: Wim Nelen
The EU has adopted a new harmonised prudential regime that will apply to all investment firms authorised in the EU from June 2021. The new Investment Firm Regulation (IFR) and Investment Firm Directive (IFD) will require investment firms to introduce new capital, consolidation, governance, remuneration and reporting requirements.
Firms need to act now to prepare for the application of the new regime. This is the ideal point in time to embed a sustainable digital way of working with regulation.
Analysis and interpretation
IFR / IFD is full of rule references and definitions. Each of them can really change your interpretation. Single Rulebook makes it easy to see all rule references and definitions with a single click. It also provides interactive visualisations of rule relationships between the different levels of regulation and a powerful search engine. This will significantly speed up your analysis and interpretation of the regulation.
Knowledge management and integration
When you’ve considered, scoped and interpreted all the rules, we offer the tooling to maintain and share that knowledge with a full audit trail of implementation, in context. This is the piece that is typically missing in implementation projects. Single Rulebook gives this to you. For no extra work and saving you time. You and your colleagues present and future will have a complete audit trail of how the firm arrived at its implementation of the regulation.
The traceability of implementation decisions can remain within Single Rulebook’s intuitive user interface or can be integrated with your policies, systems and controls. No coding required. Full integration offers many efficiencies such as enabling data lineage between your policies and procedures and the regulation, or between your capital calculation engine and the implementation audit trial of the regulation.
Customised alerts, instant reg change impact analysis
The publication of further details, tweaks, EBA Q&A and other guidance with respect to IFR / IFD is inevitable and will not be limited to the implementation period. Rule and guidance changes will continue to happen to some extent as long as IFR / IFD continues to apply to you. Single Rulebook customises reg change alerts to your context and preferences. When your implementation project is hosted by Single Rulebook, you will be instantly aware of relevant changes in regulation and you will instantly know what impact they have on your firm.
- If you require more information on IFR/IFD, please contact us today.