Presentation delivered at IBM IMPACT 2013 Dodd-Frank Trade Reporting regulations were enacted to ensure improved transparency and accountability for trade execution and reporting. However, there are key challenges such as: how do swap dealers ensure compliance and how can this be done in real-time as the windows for course correction are small. -Real-time trade surveillance across the lifecycle of a reportable trade - NACK Management - How to provide visibility in real-time to actual or potential breaches in responsibility with the flexibility to change as the regulation evolves - See the video at: http://www.nastel.com/dodd-frank-webinar.html

1. How Technology is used for
real-time monitoring of
Dodd-Frank Trade Reporting

2. Table of Contents
• Regulation, Regulation and more Regulation
• G20 Obligations
• Trade Reporting Compliance
2

3. Regulation
Regulation is causing business to change how Information
Technology (IT) is used
Transparency
Accuracy
Accountability
But, like “faster, better, cheaper” can you have all three?
• Worldwide
• Dodd-Frank in the US
• EMIR in EMEA
• Timelines are aggressive
• Not going so well…
• The search for clarity
• Very complex especially as activities span regulatory bodies
• Lots of folks with hair on fire, but not sure what to do to even start…
3

4. G20 Obligations

5. G20 Obligations – Who are they?
Group of Twenty (G20)
• Established in September 1999
• Finance ministers and central bank governors of seven major industrial
countries (Canada, France, Germany, Italy, Japan, the United Kingdom and the
United States) met in Washington, D.C. in the aftermath of the financial crisis of
1997-1998
• Discussed vulnerability of the international financial system in context of
economic globalization and showed that key developing countries were
insufficiently involved in discussions and decisions concerning global economic
issues.
5

6. G20 Obligations – Objectives
Objectives:
1. Policy coordination between its members in order to achieve global
economic stability, sustainable growth;
2. Promoting financial regulations that reduce risks and prevent future
financial calamities
3. Modernizing international financial architecture.
They are committed to reforming domestic and international rules
governing the over-the-counter (OTC) derivatives markets.
6

7. G20 Obligations - Regulators
7
Multiple Regulatory Bodies:
USA – CFTC, SEC
Japan JFSA
Singapore – MAS
Hong Kong – HKMA
EU – EMIR
Australia – APRA
Canada – CSA Canadian Securities Administrators

8. Architecture
8
Fast moving
Real-time response
necessary as time for
course correction is
brief.
Complex
Lots of asset classes and
products.
Regulation doesn’t specify
how to implement it—lots
or room for interpretation
(errors).
You are accountable
Penalties for non-compliance
not yet
defined…consequences
unclear as of yet…

9. G20 Obligations – Example of “Business in Motion”
4 themes associated with regulation
Theme Impact on Business Impact on Technology
Market Transparency Bi-lateral OTC trading
relationships migrate to electronic
Spreads tighten as prices
become more competitive
Trade volumes expected to
increase
Introduction of Trade Reporting
resulted in vast data volumes
Increased visibility required by
Compliance department
Systemic Risk Capital, clearing and margin
requirements increase costs
Connectivity and aggregation of
data from multiple locations
Regulatory Complexity Landscape complexity continues
to evolve with more jurisdictions
coming into force (globally)
Strict regulatory enforcement
program
Data Sourcing / Data Quality
Rules-based approach
Straight Through
Processing
Regulation driving more
efficiency in business model
Systems move from batch to real-
time (Intraday pricing and valuation)
ASATP – reporting windows
reduced over time
9

10. Trade Compliance – Responsibilities
what do you have to do?
The three “R”s (no, not readin’, ritin’ & ‘rithmatic…)
Real time monitoring of trading activities
Ensure that the firm complies with regulatory obligations
Follow up on reporting errors, false positives
Reconcile position across all legal entities
Reporting and dissemination
Prevent over/under/misreporting
Respond to any requests for information from regulators
Identify areas for improvement
Issues that impairs operations, trading or other critical functions
10

11. Trade Compliance

12. Architecture
12

13. AutoPilot® Monitors Trade Compliance
Typical AutoPilot deployment
13

14. Regulation is challenging…even for the regulators
CFTC can’t cope with SDR Data (--SingleDealerPlatforms.org)
• They told the industry “what” to send…but not what nomenclature to
use…thus they are all different and the CFTC can’t read it
• Even when the market participants send the correct data to the SDRs,
the data recorded for transparency…isn’t…
• So, reporting isn’t usable...the problem get’s even worse when MSPs
begin reporting
14

15. Trade Compliance – Market Transparency
Market Transparency:
• Only achieved if data can be interpreted as meaningful information
• Essential that quality of data being reported is accurate
• Issues must be identified immediately
Examples:
• Trades not yet ACKed or NACKed
• EOD Valuations not generated
15

16. Trade Compliance – Systemic Risk
Systemic Risk:
• Some Swaps now subject to clearing and margin requirements
(reducing risk but creating more complexity)
• CME Rule 1001 – some clear to DTCC and some to CME – eliminates
choice
• End User Exemption
Examples:
• Multiple SDRs,
• Break out entities : SDs, Non SD, MSP
16

17. Trade Compliance – Systemic Risk
Systemic Risk:
• Some Swaps now subject to clearing and margin requirements
(reducing risk but creating more complexity)
• CME Rule 1001 – some clear to DTCC and some to CME – eliminates
choice
• End User Exemption
Examples:
• Multiple SDRs,
• Break out entities : SDs, Non SD, MSP
17

18. Trade Compliance – Systemic Risk
Systemic Risk:
• Some Swaps now subject to clearing and margin requirements
(reducing risk but creating more complexity)
• CME Rule 1001 – some clear to DTCC and some to CME – eliminates
choice
• End User Exemption
Examples:
• Multiple SDRs,
• Break out entities : SDs, Non SD, MSP
18

19. Trade Compliance – Regulatory
Complexity
Regulatory Complexity:
• Different regulators have different focus CFTC vs. EMIR
• Multiple reporting windows defined for the same trade
Examples:
• Multiple Jurisdictions
• Time and event-based SLAs – relative or absolute & whether calendar
applies, holiday calendars…
19

20. Trade Compliance – STP
Straight Through Processing:T+1 get everything done asap and
identify bottlenecks
Examples:
Look for slowest trades / parts of the flow
20

21. Trade Compliance – STP
Straight Through Processing:T+1 get everything done asap and
identify bottlenecks
Examples:
Look for slowest trades / parts of the flow
21

22. Trade Compliance – STP
Straight Through Processing:T+1 get everything done asap and
identify bottlenecks
Examples:
Look for slowest trades / parts of the flow
22

23. Are You Compliant With
Dodd-Frank Trade Reporting?

24. What is Dodd-Frank?

25. What is Dodd-Frank?
A series of regulations that include Improved Transparency and
Accountability for Trade Execution and Reporting
25

26. What is Dodd-Frank?
A series of regulations that include Improved Transparency and
Accountability for Trade Execution and Reporting
Our focus: Real-time Trade Reporting (Title VII)
Regulators require all swaps (subject to mandatory clearing requirements) to
be reported “as soon as technologically practicable”
Real-time (RT) and confirmation messages to be reported to the SDR within
30 minutes of execution. Primary Economic Terms (PET) must also be
reported by EOD
Rejected trade messages will need to be resubmitted within the original 30
minute deadline when the trade was first reported
26

27. What is Dodd-Frank?
A series of regulations that include Improved Transparency and
Accountability for Trade Execution and Reporting
Our focus: Real-time Trade Reporting (Title VII)
Regulators require all swaps (subject to mandatory clearing requirements) to
be reported “as soon as technologically practicable”
Real-time (RT) and confirmation messages to be reported to the SDR within
30 minutes of execution. Primary Economic Terms (PET) must also be
reported by EOD
Rejected trade messages will need to be resubmitted within the original 30
minute deadline when the trade was first reported
Key challenges
How do swap dealers ensure compliance?
And accomplish this with real-time visibility and the flexibility to course
correct when necessary as the regulation evolves
27

28. Scenario

29. Scenario: Capital Markets Group in a Major Bank
29
Business Requirements
Ensure compliance to Dodd
Frank Trade Reporting
regulation.
Covers interest rates, credit
equities, commodities and
FX derivative products.
Provide end-to-end visibility
to reporting activities.
Provide visibility in real-time
to actual or potential
breaches in responsibility

30. Scenario: Capital Markets Group in a Major Bank
30
IT Environment
Heterogeneous: Distributed,
mainframe, integration
technologies such as MQ
and TIBCO, development
languages such as Java,
multiple trading packages
such as Wallstreet, Murex,
Calypso…
In real-time monitor the
lifecycle of a trade.
Provide a single tool for
monitoring all middleware
tools & consume events from
any existing monitoring tools.
Business Requirements
Ensure compliance to Dodd
Frank Trade Reporting
regulation.
Covers interest rates, credit
equities, commodities and
FX derivative products.
Provide end-to-end visibility
to reporting activities.
Provide visibility in real-time
to actual or potential
breaches in responsibility

31. The Users Monitoring Dodd-Frank Trade
Reporting
Real-time monitoring of trade reporting issues. When a NACK is
received, act to correct the issue:
31
Business Roles Function
Trader Execution time correct?…based on
economic term agreement…
Trade Support Transactions that took greater than
a specified time to achieve a
milestone
Is there a unique swap indicator
(USI) CounterParty issue?
Technology Are all trades acknowledged by
DTCC?
Compliance Was there “Double Reporting”?
Many more…

32. AutoPilot® Competitive Advantage

33. AutoPilot® Monitors IT Infrastructure
Typical AutoPilot deployment: monitoring infrastructure
33
CFTC’s O’Malia calls for savvier Technological surveillance – 2.25.13

34. 34
AutoPilot® Auto-discovers Message Flow
This is the Enterprise
Nervous System
These messages
may be in different
formats.
Essential to track
these in real time in
order to ensure
compliance.

35. 35
AutoPilot® Uses Payload to help Stitch
Tracking messages
From the outside
by matching their
message
signatures.
Inside by reading
the payload.

36. 36
Reportable Trading Events Correlated in Real-time
Automatically
correlated in real-time
Providing you with
enough time to do
something about the
issue.

37. AutoPilot Monitors Trade Reporting in Real-time
Requirements AutoPilot Features
Monitor compliance to regulatory
reporting requirements
• Real-time trade surveillance of the progress a trade is making until completion
• Automated transaction stitching across the entire lifecycle of a reportable trade
event, represented graphically as a series of milestones.
• User can be alerted to a potential or actual breach in responsibilities in real-time.

38. AutoPilot Monitors Trade Reporting in Real-time
Execution Time Tracking
Defined as when the primary
economic terms are exchanged
• Retrieves message content and extracts the actual Execution Time as the
trigger for the SLA timer rather than the time stamp for when it was generated
electronically
Requirements AutoPilot Features
Monitor compliance to regulatory
reporting requirements
• Real-time trade surveillance of the progress a trade is making until completion
• Automated transaction stitching across the entire lifecycle of a reportable trade
event, represented graphically as a series of milestones.
• User can be alerted to a potential or actual breach in responsibilities in real-time.

39. AutoPilot Monitors Trade Reporting in Real-time
Execution Time Tracking
Defined as when the primary
economic terms are exchanged
• Retrieves message content and extracts the actual Execution Time as the
trigger for the SLA timer rather than the time stamp for when it was generated
electronically
NACK Management • Automatically detects all trades that do not contain a valid ACK milestone event.
Requirements AutoPilot Features
Monitor compliance to regulatory
reporting requirements
• Real-time trade surveillance of the progress a trade is making until completion
• Automated transaction stitching across the entire lifecycle of a reportable trade
event, represented graphically as a series of milestones.
• User can be alerted to a potential or actual breach in responsibilities in real-time.

40. AutoPilot Monitors Trade Reporting in Real-time
Execution Time Tracking
Defined as when the primary
economic terms are exchanged
• Retrieves message content and extracts the actual Execution Time as the
trigger for the SLA timer rather than the time stamp for when it was generated
electronically
NACK Management • Automatically detects all trades that do not contain a valid ACK milestone event.
Part 43 Real-time reporting
requires the management of
timestamps by swap dealers
and major swap participants
• Native support for Middleware and a heterogeneous deployment including both
distributed and mainframe which seamlessly integrates into the trade flow and
contributes timestamps to the transaction stitching process.
Requirements AutoPilot Features
Monitor compliance to regulatory
reporting requirements
• Real-time trade surveillance of the progress a trade is making until completion
• Automated transaction stitching across the entire lifecycle of a reportable trade
event, represented graphically as a series of milestones.
• User can be alerted to a potential or actual breach in responsibilities in real-time.

41. AutoPilot Monitors Trade Reporting in Real-time
Execution Time Tracking
Defined as when the primary
economic terms are exchanged
• Retrieves message content and extracts the actual Execution Time as the
trigger for the SLA timer rather than the time stamp for when it was generated
electronically
NACK Management • Automatically detects all trades that do not contain a valid ACK milestone event.
Part 43 Real-time reporting
requires the management of
timestamps by swap dealers
and major swap participants
• Native support for Middleware and a heterogeneous deployment including both
distributed and mainframe which seamlessly integrates into the trade flow and
contributes timestamps to the transaction stitching process.
Monitor Mandatory Data • The user can view the transaction at any point in the flow and define conditional
rules to check against the data in real-time for immediate notification.
Requirements AutoPilot Features
Monitor compliance to regulatory
reporting requirements
• Real-time trade surveillance of the progress a trade is making until completion
• Automated transaction stitching across the entire lifecycle of a reportable trade
event, represented graphically as a series of milestones.
• User can be alerted to a potential or actual breach in responsibilities in real-time.

42. AutoPilot Monitors Trade Reporting in Real-time
Execution Time Tracking
Defined as when the primary
economic terms are exchanged
• Retrieves message content and extracts the actual Execution Time as the
trigger for the SLA timer rather than the time stamp for when it was generated
electronically
NACK Management • Automatically detects all trades that do not contain a valid ACK milestone event.
Part 43 Real-time reporting
requires the management of
timestamps by swap dealers
and major swap participants
• Native support for Middleware and a heterogeneous deployment including both
distributed and mainframe which seamlessly integrates into the trade flow and
contributes timestamps to the transaction stitching process.
Monitor Mandatory Data • The user can view the transaction at any point in the flow and define conditional
rules to check against the data in real-time for immediate notification.
Reporting Window • An advanced SLA capability that can track each reportable event against the
appropriate time-based (30 minutes after execution) or event-based (by 04:00
T+1 after confirmation date) window. The SLA also incorporates holiday
calendars and UTC timestamps. Advanced Calendars.
Requirements AutoPilot Features
Monitor compliance to regulatory
reporting requirements
• Real-time trade surveillance of the progress a trade is making until completion
• Automated transaction stitching across the entire lifecycle of a reportable trade
event, represented graphically as a series of milestones.
• User can be alerted to a potential or actual breach in responsibilities in real-time.

43. AutoPilot Monitors Trade Reporting in Real-time
Execution Time Tracking
Defined as when the primary
economic terms are exchanged
• Retrieves message content and extracts the actual Execution Time as the
trigger for the SLA timer rather than the time stamp for when it was generated
electronically
NACK Management • Automatically detects all trades that do not contain a valid ACK milestone event.
Part 43 Real-time reporting
requires the management of
timestamps by swap dealers
and major swap participants
• Native support for Middleware and a heterogeneous deployment including both
distributed and mainframe which seamlessly integrates into the trade flow and
contributes timestamps to the transaction stitching process.
Monitor Mandatory Data • The user can view the transaction at any point in the flow and define conditional
rules to check against the data in real-time for immediate notification.
Reporting Window • An advanced SLA capability that can track each reportable event against the
appropriate time-based (30 minutes after execution) or event-based (by 04:00
T+1 after confirmation date) window. The SLA also incorporates holiday
calendars and UTC timestamps. Advanced Calendars.
Reconciliation • Reporting capability that enable DTCC submissions and position reports to be
automatically reconciled against the application monitoring data that has been
gathered at the end of the business day. Reconciliation reports can identify
discrepancies between what the firm has reported and what information has
been received by the GTR.
Requirements AutoPilot Features
Monitor compliance to regulatory
reporting requirements
• Real-time trade surveillance of the progress a trade is making until completion
• Automated transaction stitching across the entire lifecycle of a reportable trade
event, represented graphically as a series of milestones.
• User can be alerted to a potential or actual breach in responsibilities in real-time.

44. Dashboard: Trade Summary Chart
View Trade Status
Failed
Drill into chart for details
44
In Progress Completed Missed SLA Failed

45. Dashboard: Review Trade Details
45
1. Review trades in progress over a time interval

46. Dashboard: Select Trade
46
2. Select a trade to get more detail on

47. Dashboard: View Timeline
47
3. View trade timeline

48. Dashboard: View Milestones
48
4. View milestones

49. Last 1 HourLast 1 Hour 08/12/2012 12:0708/12/2012 12:07Last 1 Hour 08/12/2012 12:07
Search: Trade Visibility for the Business
Search by an combination of fields in the transaction
USI, execution time, source system, USI, Asset Class, Trade ID, status,
asset class, Counterparty USI, Correlation ID…
Search for all transactions that took more than 15 minutes to
complete
49

50. Search for Trades with a Specific USI
Search for a trade with a specific USI
50
Last 1 HourLast 1 Hour 08/12/2012 12:0708/12/2012 12:07Last 1 Hour 08/12/2012 12:07

51. Search for a Trade with Multiple
Conditions
Find trades with a blank USI where ACME is not the Reporting
CounterParty
51
Last 1 HourLast 1 Hour 02/12/2013 11:0702/12/2013 11:07Last 1 Hour 02/12/2013 11:07

52. Find Trades without NACKS
All trades that received a NACK in the last 24 hours
52
Last 1 HourLast 1 Hour 02/12/2013 11:0702/12/2013 11:07Last 1 Hour 02/12/2013 11:07

53. Find Trades without ACKs
All trades in progress that have not received an ACK
53
Last 1 HourLast 1 Hour 02/12/2013 11:0702/12/2013 11:07Last 1 Hour 02/12/2013 11:07

54. Why Nastel AutoPilot®

55. Conclusion
AutoPilot® helps ensure compliance
It can provide the answer to the question, “Are you compliant?”
Detects the reasons that explain why you are not compliant
Detects the reasons that explain why you won’t be…
Two questions you need to ask yourself
1. Are you providing real-time monitoring of the end-to-end trade?
2. Can you respond to an issue in enough time to remain compliant?
(NACK, no response, missed SLA…)
55

56. Nastel AutoPilot® Provides Visibility
56
Feature Benefit
Web-based Dashboard Available anywhere including mobile devices enables immediate visibility and
response with support for LDAP authentication
Simple, Proactive
Analytics
Real-time analytics using CEP enables users to instantly see transactions of
concern such as those with NACKs from DTCC, Euroclear or Clearstream in
order to rapidly correct and resubmit them
Correlation Automating, end-to-end stitching together of the components within a trade, e.g.
exe time, capture, xform, DTCC, NACK, ACK…
Visibility Provides a view into compliance that is usable by the business, tracking: over
50 unique transaction details including: execution time, source system, USI,
Asset Class , Trade ID, status, asset class, Counterparty USI, Correlation ID
and more
Charting User defined charts for visualization of user queries
SLA reporting Supports both time based as well as deadline based SLAs
Calendars Automatic accommodation of holidays helps keep system maintenance low.
This lets analysis adjust to local policies an important capability in a function
that is distributed globally. (Utilizes Google Calendars)
History A repository searchable by USI, message contents, transaction ID or any other
captured field
Auditing All actions carried out are logged, associated to a user helping ensure
accountability
Reporting Pre-built EOD reports and Policy statistics enable effective program evaluation

57. Why Customers Chose Nastel
Best-of-Breed Middleware management solution
We are the experts—19 years of best practices built-in
Single architecture across all middleware, distributed and
mainframe: MQ family, DataPower, TIBCO & Solace
Monitor Web Services in real-time
57

58. Why Customers Chose Nastel
Best-of-Breed Middleware management solution
We are the experts—19 years of best practices built-in
Single architecture across all middleware, distributed and
mainframe: MQ family, DataPower, TIBCO & Solace
Monitor Web Services in real-time
Analytics
Transaction stitching or correlation
Detect problems before there is impact
• Reduces ticket backlog, support costs and raises customer satisfaction
• End “eyes-on-screen monitoring”
• Solve the problem of too much data complexity – old-school
analytics just can’t get it done
58

59. Why Customers Chose Nastel
Best-of-Breed Middleware management solution
We are the experts—19 years of best practices built-in
Single architecture across all middleware, distributed and
mainframe: MQ family, DataPower, TIBCO & Solace
Monitor Web Services in real-time
Analytics
Transaction stitching or correlation
Detect problems before there is impact
• Reduces ticket backlog, support costs and raises customer satisfaction
• End “eyes-on-screen monitoring”
• Solve the problem of too much data complexity – old-school
analytics just can’t get it done
Track record with Financial Services
Citi, DTCC, TD, Barclays, Credit Suisse and more…
59

60. Our Customers

61. Over 200 companies rely on Nastel
since 1994
61

62. w w w . n a s t e l . c o m
Contact us:
Web nastel.com
Twitter @nastel
Facebook facebook.com/NastelTechnologies
Email info@nastel.com
Phone 1.800.580.2344