Barclays, BNP Paribas, Goldman Sachs, HSBC and one other bank will establish consensus on position reporting obligations
Endoxa, a consortium of five leading financial institutions including Barclays, BNP Paribas, Goldman Sachs and HSBC, will collaborate to develop a Position Reporting Utility and are pleased to select Droit as the technology provider.
Global position reporting rules require market participants to report securities holdings to regulatory bodies; a process that is complex, time consuming and creates duplicative effort across the industry. The aim of the newly established Position Reporting Utility, the first of its kind, is to improve the quality of these disclosures and mitigate interpretation and implementation errors through machine-readable rule logic established through a consensus model.
Endoxa will evaluate and review complex shareholder disclosure obligations across key regulatory jurisdictions. Consensus views on interpretive aspects of the disclosure rules provided by the consortium will be combined with legal interpretation provided by Allen & Overy, alongside the standardized legal analysis contained in Rulefinder Shareholding Disclosure from aosphere LLP, to develop codified decision logic in Droit’s Position Reporting product. The resulting models will assist users in fulfilling their reporting obligations effectively and in a consistent manner while also offering regulatory transparency and helping remove reporting uncertainty.
Droit was selected as the technology provider due to the unique capabilities of its patented Adept platform, as well as the firm’s longstanding reputation for driving conversation and consensus around regulatory interpretation in the market. Droit’s Position Reporting has the ability to automate the decision-making process and delivers a traceable audit record of every position evaluated for both sell-side and buy-side institutions. To verify decisions, Droit’s Position Reporting product generates pathways linked to the original source text. This transparency into the logic provides enhanced clarity, increased operational efficiencies, and a repeatable, defendable process. Platform users also have the ability to raise queries regarding nuances in the logic implementation.
“The formation of this unique consortium, whose members include some of the largest and most sophisticated global financial institutions, provides a revolutionary approach to regulatory compliance. We believe this partnership can be extended to many issues the industry is facing,” said Brock Arnason, Founder and Chief Executive Officer of Droit. “With Endoxa, we have the opportunity to break through the complexity head-on and find clarity together on the most challenging regulatory obligations.”
“Creating this consortium will enable us as financial institutions to more effectively and efficiently navigate the regulatory complexity of the global Position Reporting rules while retaining each firm’s ownership of the underlying risks. The platform will drive unified standards and support transparent, consistent compliance across the industry,” said Richard Hempsell, Managing Director and Global Head of Core Operations, Goldman Sachs.
“Endoxa’s work ensures there is a market standard interpretation of the disclosure rules in all jurisdictions globally, which will give institutions certainty that we are meeting our regulatory requirements in a way that is consistent across multiple entities. Regulators and legislators should benefit from increased confidence that rules are being consistently applied. This represents a major step forward for our industry,” said Kara Lemont, Global Head of Financial Markets Compliance, BNP Paribas.
Droit is a technology firm at the forefront of computational law and regulation within finance and other domains. Founded in 2012, Droit counts many of the largest financial institutions as its clients. Its award-winning, patented platform Adept provides an implementation of regulatory rules reflecting industry consensus. The Adept platform processes tens of millions of inquiries a day, deciding in real-time which interactions are legally permissible across the globe. Adept is used by institutions to evaluate, with sub-millisecond latency, the full regulatory implications of any given interaction within their transactional infrastructure.
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