A major broker-dealer engaged RegEdge in performing a comprehensive Electronic Blue Sheets (EBS) reporting assessment across data, process controls and governance to detect completeness and accuracy issues with the blue sheets prior to submission, and strengthen the program to proactively detect, identify issues and remediate any gaps.
Requirements, Data Flows and Data Lineage Documentation:
RegEdge initiated the engagement with documenting a comprehensive list of requirements, including interpretations from various regulatory notices, and issues identified at other firms and the reporting specifications. We leveraged this to develop a requirements traceability matrix, and supplemented with how the firm interprets based on the regulatory guidance. For each of the complex business rule interpretation, RegEdge involved legal and compliance teams, and also recommended to bring on additional advisory from legal counsel specializing with EBS reporting to document the expectations and interpretations to remove any ambiguity based on the nature of the business at the client.
RegEdge also conducted number of workshops to capture the flow of data and process from front office until the EBS submissions. This included documenting the trade & business data flows for each asset class (e.g., Equities, Fixed Income). For each of the asset classes, data lineage documentations were prepared where each data attribute in the EBS specifications were mapped all the way to the source. All of this documentation was hosted in the Firms confluence pages, providing transparency to the large stakeholder groups, gathering feedback and obtaining sign-off from respective owners. Additionally, we
documented the entire EBS reporting process from request to submission, error correction and liaison with regulatory authorities were documented.
Assessment and Gap Analysis:
The requirements traceability matrix built was used to perform the end-to-end assessment for data, controls and process. RegEdge leveraged the EBS assessment expertise to accelerate the creation of test scripts to validate for conformance to EBS specifications, accuracy and completeness.
We were able to employ methodologies and tools such as exploratory analysis, data source reconciliation, scenario-based investigation and process set up to tackle issue pertaining to data and data source inaccuracies and errors, outliers and erroneous values and execution of correct validation guidelines to aid, bolster and remediate schemas, database procedures, historical trades, bot processes and governance framework.
All the gaps identified were further vetted and analyzed to identify the impacts to reporting (both historic and future reporting), and also recommended changes to data, process, controls or governance to remediate each finding. In addition to issues being identified, number of areas of improvement to strengthen the overall reporting frameworks were gathered.
RegEdge built an automated validation framework that will validate for conformance to EBS reporting specifications and highlight any issues for timely corrections. Additionally, we identified critical data elements to be reconciled with the golden sources of data and improve the data quality controls. RegEdge additionally worked closely with technology stakeholders to design a strategic target state architecture where the sources of data would be migrated to a big data and cloud-based infrastructure.
EBS Governance Framework:
RegEdge put together a detailed governance structure that included the roles and responsibilities of each group involved in the EBS reporting life cycle to address gaps identified in the overall governance process. RACI matrix was created at granular task level from regulatory change management to EBS submissions & error correction to ensure there was clarity and buy-in from each of the groups. Additionally, templates were created for periodic reviews and assessment of the EBS reporting framework that transformed the firm to make decisions based on clearly identified test scenarios, metrics and parameters to ensure their reporting framework continues to adjust with the business and regulatory demands.
The Results and Benefits
As part of the assessment, we were able to resolve database inconsistencies over several systems, investigate loss of data during transfer between several systems and onboard data to newer cloud-based infrastructure to perform impact analysis for all the historic reporting. This resulted in automation of impact analysis that was time consuming and manually intensive earlier and more accurate results.
Along with this, communication between different data owners within the organization for the unique identification, isolation and reporting of trades based on various parameters become more efficient.
Overall, this project helped the client to identify all the gaps in historic and current reporting and plan for the remediation exercise. Additionally, it provided the clients a framework to completely overhaul their framework across the EBS reporting lifecycle covering data, process, controls, technology and governance to achieve the goal of accurate, complete and timely reporting.