How QFC Recordkeeping is like a Box of Chocolates

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Presentation transcript:

How QFC Recordkeeping is like a Box of Chocolates Compliance solutions for the new U.S. Treasury Department Rule: Qualified Financial Contracts Recordkeeping related to Orderly Liquidation Authority

What is QFC Recordkeeping? The Treasury Department’s new regulation aims to facilitate managing Qualified Financial Contracts (QFCs) in Orderly Liquidation Authority (OLA) FDIC Receivership. The Regulation applies to large financial companies party to an open QFC including: Securities; Commodities; Forwards; Repos; and Swaps. The Regulation requires reporting of 128 data points for all open QFCs. What is 8of9? 8of9 is a next generation RegTech company that translates complex financial regulation into simple solutions. We strive to build a world where regulatory compliance is automated and easy to understand.  Our tools capture, store, and monitor regulatory content so you can focus on doing what you do best. We deliver regulations in code.

Why is QFC Recordkeeping like a Box of Chocolates? QFC Recordkeeping requires you to store information relevant to your QFCs and provide it to the FDIC within 24 hours of a request. Your data looks like this… but regulators require this. The industry stores financial contracts in .PDF and Word Documents, failing to keep track of required QFC data. Qualified Financial Contracts Regulators expect contracts to be linked to trading and credit systems to provide real-time data. Qualified Financial Contract Data Points

Required Data For QFC Recordkeeping Compliance: From Mud to Morsel… You must collect 128 discrete data points from EACH Qualified Financial Contract and provide this information to the FDIC. Only 5 of 128 Requirements per QFC Required Data For QFC Recordkeeping Compliance: Position Level - 31 Data Points Corporate Organization - 12 Data Points Counterparty Netting Set - 24 Data Points Counterparty Data -12 Data Points Legal Agreement - 20 Data Points Booking Information - 7 Data Points Collateral Detail - 15 Data Points Safekeeping Agent - 7 Data Points

Why QFC Recordkeeping Will Create a Sticky Mess There are five major obstacles in compliance with QFC Recordkeeping Requirements. 1. Data is not collected, unreliable or in an improper format. 2. Regulation overlaps with itself and other regulations, putting pressure on staff. 3. Regulations and requirements are complex and constantly changing. 4. Internal processes within financial institutions are also constantly changing. 5. There is insufficient information governance and granularity. Bad Data Regulatory Rat Nests Changing Regulations Growing Complexity No Audit Trail

Don’t Worry, You’re Already Collecting The Data You Need! Even though your organization may not be coordinating, some of the required data is the same as data you are already collecting! QFC FATCA RRP CP.5 Domicile of Counterparty C0.8 Percentage Ownership of Immediate Parent Entity in the Entity A4.13 Is Collateral Re-Hypothecation Allowed? A3.12.2 Third-Party Credit Enhancement Provider Identifier (for the benefit of the counterparty) A3.7 Agreement Governing Law

How Solutions can help you with QFC recordkeeping. Data Internal to the customer Data External to the customer Data that needs to be Created Regulatory Answer! 8of9 believes that all regulation should be broken down into ones and zeros. All data falls into one of the following categories: 8of9 created Regulatory Rules Other Service Providers Data Cleanse Fully auditable, controlled, accurate, up-to-date answer, transaction by transaction Output of data cleanse prepared in appropriate rules engine formatting Non Regulatory Data (e.g. Pricing Data) Up-to-date regulatory status and rules 8of9’s Business Logic Engine

Our consultants are different: How Services can help you with QFC recordkeeping. Legal Knowledge All 8of9ers have J.D.s + other advanced degrees (M.B.A.s, L.L.M.s, Ph.D.s,) RegTech Diverse Backgrounds in finance, tech, law, public sector & Extensive training in IT Project Management Executive Training in Emerging Regulations, Project Management and Excel from industry experts. 8of9 believes that the current approach to solving regulatory problems is cost-prohibitive, ineffective, and unsustainable. Our consultants are different: We excel at: Understanding the spirit and purpose of regulatory requirements Developing communication plans for regulators Working with diverse stakeholders Identifying gaps in business and technology processes Building controls to remediate weaknesses

QFC Recordkeeping Timeline Timeline for Implementation The Treasury Department releases the final rule. QFC Recordkeeping Final Rule Large-Sized Company Compliance Date Compliance is Required for Certain Financial Companies with ≥ $1 Trillion in assets. Mid-Sized Company Compliance Date Compliance is Required for Certain Financial Companies with ≥ $500 Billion and < $1 Trillion in assets. Compliance is Required for Certain Financial Companies with ≥ $250 Billion and < $500 Billion in assets. Small-Sized Company Compliance Date October 31, 2016 June 23, 2018 December 30, 2018 December 30, 2019 The Trump Effect: Trump’s Transition team vowed to “dismantle” Dodd-Frank, and Republican lawmakers have sought to abolish the OLA. However, it is currently unclear exactly what changes Trump and Congress will make to these requirements.

More Sustainable QFC Information Packaging 8of9 provides a deep understanding of the QFC recordkeeping requirements and simple solutions to the most difficult regulatory problems! Map Existing Data to QFC Requirements Identify Gaps & Create Missing Data Data Cleansing & Categorization Connect Source Data to Rules Engine Develop Reports 8of9’s legal knowledge and regulatory experience will ensure: All aspects of complex data collection and submission are handled correctly Compliance with the most recent version of the regulation

We look forward to working with you soon! Contacts CEO Mary Kopczynski, J.D./Ph.D. COO Matthew Fand, J.D./M.B.A. Address 8of9 1115 Broadway 11th Floor New York, NY 10010 Phone Phone: 917-261-3901 Online Email: info@8of9.nyc Website: www.8of9.nyc