CASE STUDY. EMIR Transaction Reporting

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1 CASE STUDY EMIR Transaction Reporting

2 CLIENT SUCESS STORY ELO Building a launchpad for business growth with seamless front- to- back integra8on from TradeChannel Learn how Elo avoids a hundredfold increase in operating costs When you re saving for your retirement, you want to know that your funds are in safe hands. For Elo Finland s leading provider of pensions for selfemployed people the aim is to support the financing of pensions by obtaining a good long-term return on pension assets relative to the risk of the investments. About ELO Founded in 2014 and headquartered in Espoo, Finland, Elo is Finland s preferred employment pension insurer for selfemployed people. One third of all Finnish companies and 40 percent of self-employed people in Finland choose Elo to manage their employment pension insurance needs. The challenge The benefits To continue delivering optimal returns for pension savers across Finland in a volatile economic climate, Elo must secure the best rates for its trades while complying with demanding regulations. With new European Union reporting requirements mere months away, Elo knew that without creating a solution in time, the company would need to partner with a single counterparty to handle the processes on its behalf driving up its costs dramatically. The company looked for a way to comply with the requirements in a timely, cost-effective manner. By eliminating the need to commission a single counterparty to handle its regulatory reporting obligations, Elo can continue to work with a wide range of counterparties and secure the best value for its trades. As a result, the company has avoided a potential hundredfold increase to its total costs, and achieved a full return on its investment in the TradeChannel solution within a single week. With this cost-effective approach to meeting its regulatory requirements, Elo can more easily reach its annual returns targets for pension savers. The solution Elo engaged experts at TradeChannel to design and deploy an automated reporting solution based on TradeseC a highly flexible web-based integration platform specially designed for the financial services industry. Using TradeseC, Elo automatically transfers the required trade data to the appropriate regulatory data repositories.

3 Countdown to compliance Markus Rusi, Head of Middle Office at Elo Mutual Pension Insurance Company, comments: As market volatility persists and growth remains low, operational cost-efficiency is becoming more important than ever. Over the last five years, Elo has successfully delivered an annual nominal return of 6.5 percent. Achieving similar returns will be challenging in the coming years and require tight control over costs. Regulation also plays a vital role in the pensions space, and in recent years we ve seen a significant increase in the frequency and complexity of new requirements. We must carefully assess the technical standards for incoming regulations, determine our exposure, and develop costeffective solutions to comply with them in a timely manner. Following an exceptionally busy year during which the company completed a merger project in 2013 Elo faced a time crunch to implement a new European Union (EU) reporting standard set by the European Securities and Markets Authority (ESMA). Because so many of our resources w e re d i v e r t e d t o m a n a g e a complex merger process, we found ourselves three months from the introduction of the EU reporting standard without the processes in place to handle the new requirements for our over-thecounter [OTC] derivatives, Rusi explains. We knew that if we were unable to build a solution in time, we would need to commission one of our trading counterparties to handle the reporting for us. However, if we concentrated all our trading activities with a single counterparty, we would lose our ability to choose the best execution rates from all our trading counterparties, which would increase our costs dramatically. Because higher costs could threaten our ability to hit our return target, the pressure was on to build a reporting solution in time to meet the deadline. We estimate that we have avoided an increase in costs of as much as a 100 times and we believe we achieved return on investment from our TradeseC solution in less than one week. - Markus Rusi, Head of Middle Office, Elo Mutual Pension Insurance Company Operational costefficiency is becoming more important than ever Significant increase in the frequency and complexity of new requirements Pressure was on to build a reporting solution

4 Meeting the deadline To beat the clock, Elo engaged a team of experts from TradeChannel to build a reporting solution based on TradeseC, an integration platform tailored for the unique needs of the financial services industry. Of all the vendor solutions we considered, TradeChannel really stood out as the best possible answer to our reporting challenges, recalls Rusi. We already had an automated solution provided by our clearing broker for our exchange traded [ETD] derivatives, and we were looking for a similar approach for our OTC assets. We quickly realized that the TradeChannel team possessed both the industry expertise and the flexible platform we needed to meet that requirement quickly, without incurring unsustainable costs. 2 Months Implementation time Working together with TradeChannel, E l o d e s i g n e d s t r a i g h t - t h ro u g h processing (STP) workflows to securely transmit data from its frontend SimCorp Dimension system to a trade repository designated by ESMA. With the deadline looming, the pressure was really on to deliver a solution in time to meet our regulatory requirements and working with TradeChannel helped us achieve the goal smoothly and in good time, Rusi says. Within just two months, we successfully designed, tested and pushed our new STP workflows into production. Today, any OTC trades entered into the company s portfolio management system flow via TradeseC to the trade repository. The entire process happens transparently, without any need for manual intervention from Elo.

5 ROI In less than 1 week Delivering returns year after year With an STP solution to help meet its EU reporting obligations, Elo is achieving its goal of delivering compliant, cost-efficient operations helping it continue to hit its return targets for savers across Finland. If we were forced to trade with a single counterparty to satisfy our reporting requirements, we would have suffered a major blow to our ability to secure the best deals available on the market, adds Rusi. By building a solution ourselves, we can protect our competitiveness by trading with the full range of counterparties available to us on the market. As a result, we estimate that we avoided an increase in costs of as much as 100 times, and achieved return on investment from our TradeseC solution in less than one week. Elo has now worked with TradeChannel for a number of years, and the company continues to trust TradeseC to manage its regulatory requirements. TradeChannel has delivered a consistently high level of service, and we really appreciate the fact that they continually develop our solution to help us maintain compliance, comments Rusi. For example, in the last few years the EU reporting standard has evolved, and TradeChannel helped us make the required tweaks to our workflows to send the additional data from our frontend systems to the ESMA trade repository. Looking to the future, Elo is confident that it has the flexible solution it needs to address new regulatory requirements. TradeChannel provide more than just an integration platform they possess the expertise and the creativity required to build solutions to meet complex reporting obligations without a significant cost impact. We couldn t be happier with the service we receive from TradeChannel, and we ll certainly consider using TradeseC to meet new requirements when they emerge.

6 System integration Regulatory reporting brings challenges and complexity. TradeChannel act as integration partner - supporting clients with technical solutions and regulatory knowledge. Client systems The data you are required to report rarely comes from one system or in a single format. With TradeseC system integration you get streamlined and flexible internal processes - independent of format and source. Evolving requirements Requirements are constantly changing. We partner with Regis TR, DTCC and Deutsche Börse to gain, comprehend and then share insights of the latest updates. Control, transparency and scalability TradeseC gives you an overview of what and when transactions have been reported. TradeseC is multi-regulatory platform ready to add regulations as they emerge. Data Legal Transaction Reporting Pre-validation Aggregation Reconciliation Diversity of formats and sources Enrichment Exception handling Validation Cost efficiency Reporting MiFID II Phone +46 (0) SFTR TRs TradeChannel AB Barnhusgatan 16, 2 fl Stockholm Sweden FinfraG EMIR Investing in reporting solutions are not one-off investments as new regulations and requirements evolve. At TradeChannel clients be n e fi t f ro m s h a re d c o st ag reem ent s. TradeChannel implement new requirements and divide the cost between the clients. External data ARM / NCA Visit