Applying artificial intelligence to hedge funds- Special report in HFM

In a special report for HFM, Geraldine Gibson-Dautun, CEO, AQMetrics, considers the future of artificial intelligence for hedge funds.

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Why investment in the data revolution is priceless

Each emerging regulation, AIFMD, MiFID II, EMIR, MAD II, UCITS V, PRIIPs and SFTR, highlights the need for consumer protection. These regulations aim to create more efficient controls, the absence of which has been attributed to the financial crisis. However global regulators are recognising that even the strongest regulatory supervision cannot solely prevent all instances of unethical behavior. Regulators are now promoting the importance of culture when it comes to compliance. This places transparency at the heart of the business operating model by minimising the risks associated with malpractice across front, middle and back-offices. It is more important than ever that firms develop a compliance function that supports responsible compliance outcomes.

Colm Kincaid, Director of Securities and Markets Supervision for the Central Bank of Ireland, outlined in his speech at a Deloitte breakfast briefing in June 2018 on  that “…the Central Bank will have an increased emphasis on culture within the firms they regulate. Further a major practical challenge lies in putting the mechanisms in place to know what culture prevails in a firm’s organisation and where outliers may be found. Technology and data play critical roles here”.1

Probity measures introduced in the wake of the crisis have fallen significantly short of effecting change and it is time to introduce new measures.  Derville Rowland, Director General, Financial Conduct for Central Bank of Ireland further stated in November 2018,  “with this comes the inevitable focus of regulators and the importance of compliance culture and controls”. 2

From a technology standpoint, Forbes estimated that 90% of spreadsheets in use today contain errors. Which means that firms dependent on spreadsheets are facing unacceptable levels of risk. The more data asset managers acquire, the greater the scope for inaccuracies, especially so when managers use manual solutions. With data management as a key area of concern, firms who can demonstrate that they have the right systems and controls in place will be in a stronger position when it comes to regulatory compliance, minimise their risk and provide greater transparency to regulators and consumers. Regulatory Technology that AQMetrics provides is helping the compliance function improve overall data quality, data accuracy, data aggregation, data validation along with reporting to regulators and the Board. AQMetrics Supervisory Control Portal allows the compliance function to manage compliance risk with consistency and control. Risk management is auditable, transparent and provides independent assurance to a firm’s board, its stakeholders and the regulators. Having further insight into the cumulative impact of risks on a firm’s business units allows for accountability at the operational level, supervisory level and board level.

Regulatory Technology offers an opportunity for firms to implement more stringent controls that negate the risk of human oversight or inefficiency by automating compliance. Firms partnering with RegTech firms will ultimately put themselves in a higher league by paving the way for improving dialogue with local and global regulators. Further firms who invest in automated regulatory technology will benefit most from the data revolution.

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Blog, Press

AQMetrics recognised for MiFID II Transaction reporting excellence

AQMetrics is delighted to have been nominated for the 2019 HFM European Hedge Fund Services Awards in the following categories:

  • Best MiFID II solution – trade and transaction reporting
  • Best Regtech solution
  • Best use of cloud technology

HFM European Hedge Fund Services Awards are annual recognition for hedge fund service providers that have exceptional customer service and innovative product development over the past 12 months. AQMetrics is the previous winner of HFM European Hedge Fund Services award for Best Regtech Solution in 2018  and Best Compliance Product for Small and Start Up Firms in 2016.

The 2019 nominations are testament to AQMetrics’ growth and  product innovation for MiFID II over the last two years. AQMetrics is authorised as an ARM (Approved Reporting Mechanism) by the Central Bank of Ireland, and passports its MiFID II transaction reporting services throughout the EEA. AQMetrics is also seeking authorisation with the FCA to ensure our customers with UK branches have continuous reporting in the EEA and the UK following Brexit.

By leveraging AQMetrics advanced technology and extensive understanding of the regional and global regulatory landscape, financial firms throughout Europe can be better prepared for regulatory changes as and when they happen. AQMetrics delivers a consolidated platform for risk and compliance, with seamless data management and cross-regulatory data insights.

Commenting on the award nominations, Geraldine Gibson-Dautun, CEO of  AQMetrics stated, “We are proud to once again be recognised as a global leader in the RegTech space. The decision to become a regulated RegTech and our subsequent 2018 authorisation as a Data Reporting Service Provider under MiFID II has firmly placed AQMetrics integrated platform as a ‘One Stop’ for our global client base. Our customers speak for themselves when they identify AQMetrics as their chosen solution across the myriad of cross jurisdictional regulations that they have to comply with.”

Claire Savage, COO of AQMetrics added, “AQMetrics demonstrates excellence and differentiates itself from competitors not only with its comprehensive MiFID II functionality, but also through its experienced staff, its collaborative approach, its dedicated customer success team, its robust technology, and its deep legacy system integration skills. This serves as proof of our MiFID II innovation and recognition of our positive client experience, we are honoured to be recognised by HFM again”.   

Blog, Buzz

Meet the Team- Colm Mathews

At AQMetrics we have a highly skilled, experienced and diverse workforce with wide ranging backgrounds. Today, we introduce you to our Graduate Software Engineer, Colm Mathews.




Colm Mathews, Graduate Software Engineer.

Describe your job in three words:

Extract, Transform, Load.

What is the most exciting thing you are working on?

Abstract representation and optimization of business rules.

How has your background helped with your role in AQMetrics?

My background in theoretical physics and mathematics helps me approach problems in a quantitative and structured way.

Best thing about working in AQMetrics?

The friendly and helpful colleagues.

Who would you most like to swap places with for the day and why?

Jeff Bezos. I’d like to transfer a fair amount of his money into my bank account before the day ends :)

Last book you read?

Cosmos by Carl Sagan.

Website you visit the most?

Youtube – lots of informative topics and videos created by passionate people.

Tell us something we don’t know about you.

I took part in a Strictly Come Dancing fundraiser for my local football club.

Blog, Buzz

AQMetrics attends annual Funds Congress

AQMetrics’ CEO Geraldine Gibson-Dautun will be attending the 8th annual Funds Congress on Thursday, the biggest central London-based asset management conference , on 7 February 2019 at the QEII Conference Centre, Westminster in London.

Lorraine Lyons, Business Development, will also be in attendance. If you would like to meet with AQMetrics to discuss how we can assist your firm, please email

To register for the event and learn more click here.


FCA publishes MiFID II guidelines for hard Brexit

The FCA has published their expectations for firms, trading venues and ARMs under the MiFID II Transaction Reporting regime, in the event of a hard Brexit.

Four points to take note of:

  1. FCA FIRDS will replace ESMA FIRDS, this will be fed with live production data from early March, with the goal of being fully operational by the end of March. Test access will be available to connected firms and authorised ARMs from 21 February 2019. Interestingly, FCA FIRDS will use Amazon’s elastic search engine, which should yield better results than the existing ESMA form-based search capability.
  2. Should a hard-Brexit occur on Friday 29 March 2019, there will be an immediate switch-over to UK FIRDS on the subsequent weekend, with the aim of being live on 1 April 2019. Should an implementation period be agreed, then it is more likely that a phased migration to UK FIRDS will occur.
  3. UK trading venues will need to prepare to transaction report for transactions on their venues by their EEA members (who are not operating through a UK branch), who report to their home state within the EEA and who will become 3rd country firms as regards the UK after 29 March 2019.
  4. EEA firms, who operate through a UK branch, will now need to prepare to submit transaction reports to the UK, either by directly authorising with the FCA MDP, or by contracting with an ARM that is authorised to do so. This may involve changing ARM, if the ARM has not elected to participate in the FCA’s temporary authorisation regime.

While the prospect of a hard Brexit is daunting for EEA firms operating a UK branch, the FCA has stated that no enforcement will be taken against firms who are not immediately compliant with the new requirements. Naturally, all impacted firms must demonstrate that reasonable steps have been taken to prepare to meet the new obligations by 29 March 2019.

Blog, Buzz

Meet the Team – Cathal Connolly

At AQMetrics we have a highly skilled, experienced and diverse workforce with wide ranging backgrounds. Today, we introduce you to our Head of Global Regulatory Reporting, Cathal Connolly.




Cathal Connolly, Head of Global Regulatory Reporting 

Describe your job in three words:

Challenging, Changing, Interesting

What is the most exciting thing you are working on?

Currently, I am working on the live AIFMD filings for our customers.  We are constantly investigating new regulations to keep up to date with the needs of customers and the demands of regulators. As we provide a consolidated platform for risk and regulatory compliance, I am working with customers to onboard automated risk services.

How has your background helped with your role in AQMetrics?

My background in accounting and fund administration has provided me with the knowledge needed for my role here in AQMetrics as Head of Global Regulatory Reporting. I have worked on numerous different fund types from completion of NAVs to pricing verification of portfolios. This experience has helped me understand our client’s models and their portfolio for regulatory compliance.

I have worked in some of the world’s largest administrators, setting up their regulatory reporting function and ensuring their regulatory knowledge was compliant. My team has a similar background to myself, and together we embed the funds knowledge into AQMetrics’ automated platform. The firms we work with are assured that the team here truly understand their requirements.

Best thing about working in AQMetrics?

The ability to build and deliver an amazing product and application to our customers and industry. Working so closely with our engineering team means I can see the deep domain knowledge of the customer success’ team being automated into the platform.

Who would you most like to swap places with for the day and why?

Joe Schmidt – he is a genius, and somehow manages to stay humble and down to earth.

Last book you read?

The Test – Brian O’Driscoll autobiography, with a young family I don’t have much time to read.

Website you visit the most?

Sky Sports – I like to keep up to speed with the sports news.

Tell us something we don’t know about you.

I have been very fortunate to have travelled the world playing rugby, and have visited some countries that I would have never had the opportunity to visit otherwise.


UCITS after Brexit

How will law in the UK affect UCITS funds after the 29th March 2019? This is the big question that none of us currently have the answer to.  

It is interesting to see however, that larger UCITS managers are taking pragmatic steps to ensure that they have contingencies in place that allow for all eventualities. The larger managers are doing all in their power to ensure that they continue to provide a gold standard service to their customers after Brexit.

As we face into a period of high volatility and likely market declines in specific regions, UCITS fund managers are thinking of how best to protect their customers’ interest. It is for this reason that we are seeing an onslaught in the creation of mirror funds.

As it is unclear at this stage as to whether UCITS funds registered in the UK will be able to market in Europe once the Article 50 deadline is reached, it is important for UK fund managers to consider the worst case scenario and how best to continue to serve their customers with minimal disruption. 

UK UCITS fund managers know that in a worst case scenario they will lose their UCITS status upon the UK leaving the EU, thus becoming a ‘non-EU Alternative Investment Fund (AIF)’. With this new status the funds will immediately lose their EU passporting authority and cannot be distributed across the twenty seven EU countries. Losing EU investors is something that the current UK UCITS fund managers can ill afford to do.

One contingency approach adopted by Barings, Crux, and Schroders is the use of EU based mirror funds. These mirror funds have the same investment guidelines as existing unit trusts to ensure that UCITS fund managers can give their customers contingency options in the event of issues with the European marketing of UK funds.

But what about the EEA UCITS funds that want to continue marketing in the UK after the 29th March 2019? The FCA has published two draft directives relating to Brexit that will establish a Temporary Permissions Regime (TPR). These directives allow EEA funds that currently market in the U.K. under an EEA passport to continue to do business for three years after the 29th March 2019. Neither of the draft directives are, as of yet, in force.

Under the draft AIFM (EU Exit) Regulations 2019, EEA AIFs, EU VC Funds (EuVECAs) and EU Social Entrepreneurship Funds (EuSEFs) will be able to be marketed in the U.K. post-March 2019.

Under the draft CIS (EU Exit) Regulations 2019, EEA UCITS that currently market in the U.K. under an EEA passport can  continue to access the U.K. market post-March 2019. An operator of an EEA UCITS within the TPR will be able to market new sub-funds in the U.K. post-Brexit, subject to certain conditions. The FCA has yet to publish directions in this regard.

Whatever the fate of UCITS funds under UK law will be, the reality is that UCITS managers must remain vigilant regarding excellent service to their customers while remaining compliant to their governing body, be that EU or UK, or risk losing investors.


Harmonising regulatory reporting with your firm’s business operating model.

Harmonising regulatory reporting with your firm’s business operating model.

Q and A with Cathal Connolly, Head of Global Regulatory Reporting, AQMetrics

What can firms do to ensure regulatory reporting accurately reflects the firm’s business operating model?  We sat down with our head of global regulatory reporting, Cathal Connolly, to learn more.

How has regulatory reporting evolved over the last 5 years?

When regulatory reporting was launched, investment managers’ sole focus was on meeting their reporting obligations, without necessarily reflecting their own firm’s methodologies. At the same time, many regulatory reporting solutions in the market offered a ‘one size fits all’ approach, which contributed to overly-simplified reporting being widespread. In addition, manual manipulation of data and overrides were common in early filing periods.

This was acceptable on a short-term basis, but it is not sustainable from an audit and best practice perspective. There is a growing need for personalisation today which is driven primarily by the huge degree of variance in investment managers’ strategies. For example, managers will have differing views on what they classify as borrowing or what is deemed to be unencumbered cash. In addition, if a manager has a short position, it might be deemed as borrowing or there might be enough long cash to counteract it.

What type of considerations are firms making when putting outsourcing arrangements in place for regulatory reporting?

I would recommend that the firm’s business model be reflected in the regulatory filings and the reporting processes itself. Any outsourcing arrangement should be a partnership, where the outsourced party can bring both funds industry domain knowledge and industry best practices. The reporting platform should be flexible enough to accommodate manager or fund-specific methodologies. This removes the need for manual data amendments and saves the investment manager time, effort and potential errors in the regulatory filing process.

How can the use of workflow enhance the regulatory reporting process?

A regulatory reporting platform should offer workflow that is aligned with the investment manager’s business processes. Large investment managers will typically have separation of duties in the preparation, review and sign-off of the regulatory filings. Workflow should be intuitive, and enhance the review and sign off process. Audit trails are important for tracking critical path activities.

What is your best advice to firms on regulatory reporting?

Regulatory reporting does not have to be a manual, time-consuming process that distracts from a firm’s core activities. Outsourcing arrangements can work particularly well when the outsourcing partner takes the time to the understand the firm’s business model and is proactive in offering industry best practice advice. A regulatory reporting platform should eliminate the need for manual data amendments and have a streamlined workflow which then allows investment managers to retain control of their regulatory filings with minimal disruption to their business.

Blog, Buzz

Meet the Team- Wesley Cooper

At AQMetrics we have a highly skilled, experienced and diverse workforce with wide ranging backgrounds. Today, we introduce you to our data architect, Wesley Cooper.





Wesley Cooper, Data Architect

Describe your job in three words:

Scalability, Reliability and Insight

What is the most exciting thing you are working on?

The latest iteration of our Rules Engine will have many innovative features. Working to realise the full potential of this product by focusing on externalised business logic and future enhancements, such as machine learning and natural language processing, has been very rewarding.

How has your background helped with your role in AQMetrics?

With a background designing and creating quantitative data models with Paddy Power and large real-time data processing systems with Verizon, I draw heavily from my experience in the design of our software stack. Everything at AQMetrics is built with the future in mind which is why there is a huge focus on best practice, best technologies and doing things the right way.

Best thing about working in AQMetrics?

I really enjoy being part a highly committed and tight-knit team here at AQMetrics, however, it’s the support that you get from all functions across the company which makes it a special place to work.

Who would you most like to swap places with for the day and why?

A personal hero of mine is San Antonio Spurs Head Coach Gregg Popovich. Trading places with one of his assistants for the day would be an incredible way to learn leadership, team-building and mentorship from one of the greats

Last book you read?

The Mongol Empire: Gengis Khan, his heirs and the founding of modern China by John Man

Website you visit the most? to fulfil my addiction to forecast analytics and for worldwide news.

Tell us something we don’t know about you. 

I am a Nevada licensed Croupier having professionally dealt Blackjack, Roulette and Baccarat.

Blog, Buzz

Meet the Team – Phoebe Toal

At AQMetrics we have a highly skilled, experienced and diverse workforce with wide ranging backgrounds.

Each month, we introduce you to a member of our team. Today, it’s our Marketing Executive, Phoebe Toal.



Phoebe Toal, Marketing Executive

Describe your job in three words:

Challenging, Creative, Collaborative

What is the most exciting thing you are working on?

We are currently working on a MiFID II campaign and we’re gearing up for the Paris Fintech Forum at the end of January.

How has your background helped with your role in AQMetrics?

I studied Digital Marketing at DCU. The course taught me how to match analytic and creative skills for successful marketing.  My previous position was four years at another RegTech where I learnt about regulatory reporting and event marketing, giving me excellent experience for my current role.

Best thing about working in AQMetrics?

The whole team are interested and engaged in the company marketing activities, it is great to have access to so many domain experts. Management are extremely knowledgeable with a clear vision of what they want the company to achieve.

Who would you most like to swap places with for the day and why?

Tina Fey, would love to know more about her creative process.

Last book you read?

Milkman by Anna Burns. Winner of 2018’s Booker Prize.

Website you visit the most?

The Guardian for the news and The Hollywood Reporter for entertainment news.

Tell us something we don’t know about you. 

I’m a qualified Pilates Instructor.


Meet the Team – Steve Barnes

At AQMetrics we have a highly skilled, experienced and diverse workforce with wide ranging backgrounds.

Each month, we introduce you to a member of our team. Today it’s our Chief Technology Officer, Steve Barnes.



Steve Barnes, Chief Technology Officer

Describe your job in three words:

Interesting, exciting, challenging

What is the most exciting thing you are working on?

Most recently, moving AQMetrics cloud platform to a true self-service model for customers, because it empowers customers to be in control of their own data management, so they can own, manage and use the system as they see fit.

How has your background helped with your role in AQMetrics?

I’ve worked for software companies in the finance industry, mainly in technical roles, for nearly 20 years, starting in anti-money laundering & working in areas such as fraud, sanctions, screening. This has given me a unique insight into what banks, fund administrators and investment managers need to do from both a business and technical point of view to adhere to regulations.

Best thing about working in AQMetrics?

Helping build the diverse team. Also, I truly believe we are delivering solutions that are changing the way the industry thinks. We are a cloud-first company, and have the skills, expertise and experience to create software in a way to allow fast adoption of best in breed technology and practices and deliver these to our customers.

Who would you most like to swap places with for the day and why?

Chris Hadfield, the astronaut. His view of the world is pretty unique and I’d like to experience it for a day.

Last book you read?

The Man Who Touched His Own Heart by Rob Dunn. Books describing medical firsts intrigue me and the stories about the first attempts to perform heart surgery are amazing.

Website you visit the most?

Twitter and Wiggle.

Tell us something we don’t know about you. 

I served two years apprenticeship as a butcher when I was 16.


CEO Message: 2018 was a year of change, what lies ahead in 2019?

Geraldine Gibson-Dautun, CEO

There is no doubt that the world around us is changing rapidly and never more so than in 2018. This was a transformational year for AQMetrics.

We started into 2018 with the dawn of MiFID II. All of our preparatory work and that of our customers throughout 2016 and 2017 paid off. We successfully went live on the 3rd of January 2018 as an Approved Reporting Mechanism, a Data Reporting Service Provider authorised by the Central Bank Of Ireland under ESMA’s MiFID II. Almost one year on and we still wear our authorisation as a badge of honour. We are proud to be one of the only regulated RegTech firms in existence.

Acquisitions across the industry continued apace throughout 2018. As a direct result, we have seen an increased need for holistic and independent technology solutions in the market. A wave of acquisitive moves in 2018 has led our larger customers to extend their use of the AQMetrics platform, as they scale and deepen their risk and regulatory reporting capabilities.

As firms prepare for Brexit, the movement of investment managers into EEA member state jurisdictions has led to an increase in demand for multi-jurisdictional regulatory risk and reporting solutions. As a result, AQMetrics has broadened its customer base across Europe and has started to be seen as a leader in the regulatory risk and reporting space, particularly in central Europe.

In a world of uncertainty, there is one thing that I am sure of; I cannot predict the future. My team and I have a mission to be a global leader in the regulatory risk and compliance technology space. How we do that depends not only on what we have learned from our past experiences but also on our ability to prepare for future change, even when we cannot predict all outcomes. We look at dynamics and trends that help us navigate the best course for AQMetrics and our customers. Here is a summary of what we expect for 2019 and beyond.

Growth in the financial services sector. The financial services sector continues to grow despite macro challenges. With nine years of a bull run we think that in 2019 growth will continue in the sector, albeit we recognise that markets work in cycles and at some point the bear will raise its head.

Unfortunately, investment managers have suffered more than the broader market in 2018. But there is some light at the end of tunnel. With fixed income margins holding better than equities and the larger managers continuing to attract new business, we don’t think we will see the bear in 2019. We expect to see most growth in the passive space with global ETF assets having the potential to grow five fold to $25 trillion by 2025. With over 80% of EU and US active funds underperforming their benchmark in 2018, we anticipate that growth will remain more visible on the passive side as we go into 2019.

With an ever flattening US yield curve, a brief inversion of the yield curve in early December and the gap between the two and ten year notes at its narrowest since 2007, one could say that a recession is looming. Looking a little closer at this perception however,the inverted yield curve doesn’t by default cause a recession, it’s merely an indicator. When short term interest rates in the US are inflation-adjusted they are still below 0% and so we predict that the recession will not be hitting in 2019 and most likely growth will continue, albeit somewhat slower than previous years.

Brexit. Unfortunately we cannot ignore the impact of Brexit. The UK will most likely leave the EU in the next six months. The UK was a major force at the EU financial services regulatory table, and a leading proponent for much of our current market regulation. This will, of course, change from 2019 onwards.  Cross-country alliances in financial services will undoubtedly shift and financial services will become more dispersed. We see this already with some of our partners and customers setting up their front office in Paris and back office in Dublin. Undoubtedly the regulators across Europe will be focused on cohesive supervision of these major players.

European capital markets. With Brexit afoot, we believe that an enhanced European capital markets framework is opening a new chapter for Europe. Of course, the success of the European capital markets will depend upon consumer confidence and trust in the financial services sector. Clearly regulation plays a key role here.

Technological innovation. Innovation and the use of technology across the financial services sector is here to stay. We expect to see increased participation by regulators with FinTechs and software firms, as the ecosystem widely adopts the transformational power of technology. AI is moving from a buzzword to mainstream applications as we head into 2019. We also appreciate the need for information security at AQMetrics, which is why we are ISO 27001 certified. We anticipate that many more software and technology vendors will follow suit and place information security at the core of everything they do from 2019 on.

With all of these predictions, what does 2019 hold for AQMetrics? We will continue to offer automated data management and regulatory reporting solutions across AIFMD, Form 13F, Form PF, CPO PQR and MiFID II transaction reporting online 24/7 for self-service customers.

For 2019, we have our eyes firmly set on our customers’ digitisation needs in the performance and risk management space. Our data visualisation tools and configurable dashboards have been well received by our customers through 2017 and 2018, and we will continue to focus on this area. Our AI capabilities, coupled with data analytics and data insights, are providing much needed independent risk systems for our customers. This will continue to be an area of focus.  

2018 was a year of awards for AQMetrics. We were delighted to win the ‘Best RegTech Solution’ at the HFM Technology European Technology Awards 2018, the MEDICI Top 21 – RegTech Award and the ‘Best Technology Firm’ at the CTA Intelligence US Services Awards 2018. We have set the bar high for ourselves by being named on the RegTech 100 list for the second consecutive year and we go into a new year determined to do that again in 2019.

Wishing you a prosperous and happy new year.


Blog, Buzz

Meet the team – Bruna Natal Oshiro

At AQMetrics we have a highly skilled, experienced and diverse workforce with wide ranging backgrounds.

Each month, we introduce you to a member of our team. This month it’s Bruna Natal Oshiro from our engineering team.



Bruna Natal Oshiro, Senior Lead Java Developer

Describe your job in three words:

Exciting, challenging, rewarding.

What is the most exciting thing you are working on?

A new extension  to our real-time, data-driven rules engine.

How has your background helped with your role in AQMetrics?

I’ve been working in software development for over 10 years. I have experience with C, PHP, .NET C#,  front-end technologies but chose Java to deepen my expertise and career. I believe my experience across these technologies has provided me with a strong foundation, and helps with my everyday job at AQMetrics.

Best thing about working in AQMetrics?

AQMetrics has a very approachable management team, who provide us with everything we need to deliver excellence to our clients. We always have exciting projects to work on and great people to work with.

Who would you most like to swap places with for the day and why?

Vice President and Prime Minister of the United Arab Emirates, HH Sheikh Mohammed Bin Rashid Al Maktoum, he once wrote: “The word impossible is not in a leader’s dictionary. No matter how big the challenges are, strong faith, determination and resolve will overcome them”.

Last book you read?

Thinking, Fast and Slow by Daniel Kahneman.

Website you visit the most?

Brazilian economic indicators –

Tell us something we don’t know about you. 

I worked as a physics tutor when I was at school and during my college years. 



Five Innovative Strategies for Resilient MiFID II Reporting

Steve Barnes, CTO

In our previous blog, we took time to pause, reflect and consider some lessons learned from the compliance processes for MiFID II transaction reporting. In this blog, we take a step further and look at five ways innovation can create a resilient MiFID II transaction reporting framework.

In his speech of 3rd July 2018, Mark Steward, Director of Enforcement and Market Oversight at the Financial Conduct Authority, stated1 that the FCA now processes over half a billion transaction reports per month, coming from 23 submitting entities, representing 3,150 firms.  The FCA has invested heavily in its technical capacity to ingest, process and analyse the information reported. In its transaction reporting forum from July 2018, the FCA provided further analysis on the quality of those transaction reports, highlighting the major sources of rejection rates. Duplication, content validation and instrument validation errors feature highly in the top ten.

From this analysis, it is clear that a resilient framework is required to achieve robust reporting. Effective use of technological innovation can help achieve this by enabling firms to harness data to proactively monitor, identify, and correct situations that can lead to poor outcomes.

Here are five key areas where innovation can make a difference.

  1. Data is imperfect. In order to achieve the accuracy requirements, firms need a realistic, flexible process for managing data. This can be achieved by combining APIs or automated data feeds from trade repositories with user self-service, in-application data management and maintenance functions. A well-designed self-service intelligent reporting platform will usually have data preparation tools that store, manage, and provide access to source data, prepared data, and data models, with appropriate governance measures. This helps reduce the headache of managing all data ‘at source’.
  2. Don’t be an outlier with high rejection rates. Industry rejection rates have been cited at 5% of total reports submitted. Not only is it undesirable to be identified by the regulator has having poor accuracy, dealing with high volumes of rejections can also be operationally burdensome. Early validation is key to achieve accuracy. Validate the data at each point; on loading, on processing and on generation of XML to be submitted to the regulator. Inaccurate data should not pass through these three gates. At AQMetrics, we see a rejection rate at less than 0.5%. This is achievable for all firms and submitting entities.
  3. Leverage external data sources to your advantage. Industry available external data sources are maturing. The GLEIF2 infrastructure has achieved excellent levels of stability since launch date. DSB ANNA3 and FIRDS4 have continued to mature over the course of the year. The commitments from ANNA and GLEIF to link ISINs to LEIs in an effort to assist with accurate reporting, will further strengthen the quality of external data sources that can be leveraged to the firm’s advantage. An intelligent reporting platform will integrate these sources, and will leverage appropriately in the validation process.
  4. Timing is key. Validating the data early in the process, rather than downstream at reporting time, can eliminate bottlenecks at the t+1 deadline. The rise of the Intelligent User Interface (IUI), stemming from breakthroughs in machine learning, allows intelligent user prompting. Timely alerting of critical path issues via secure mobile applications can help prevent end-of-day delays.
  5. Achieve continuous reconciliation. In accordance with regulatory technical standards, the firm’s reconciliation responsibilities include checking the timeliness of the report, the accuracy, and the completeness of the individual data fields. Reconciliation should be on-demand, continuous and part of ‘business as usual’ daily processing.  Firms can achieve this with configurable data analytics dashboards, where multi-dimensional data insights can drive improved reconciliation processes.

Finally, resilience is achieved through a combination of these innovation strategies. With this kind of approach, the reporting framework becomes stronger and can be augmented further to provide data insights beyond the original purpose of the reports. Intelligent user interfaces, machine learning and data analytics are now becoming widespread. The careful application of these technologies will lead the industry into an era of rapid learning and improvement, and ultimately a stronger foundation for compliance.


How to prove your UCITS Fund is not Index Hugging

With more than 2,000 Irish investment funds facing into Central Bank of Ireland (CBI) investigations to ensure they are not misleading customers about charges and other issues it’s important to ask how these firms can best provide regulators with the proof that they need.

The CBI investigations into UCITS funds have been sparked by concerns raised by the Paris based European Securities Markets Authority (ESMA). Yet this is not a new area of concern for the CBI. The CBI’s 2016 report sought to ensure that customers were not misinformed about UCITS’ investment policies and charges. As a result UCITS funds are well briefed on the concerns of the CBI.

The CBI recently announced, of particular concern is “closet indexing” or “index hugging”. This is where the fund managers falsely claim they invest actively to get better returns than those offered by stock exchanges, but in fact they take a more passive approach and track a benchmark index which in turn results in returns matching those of the markets.

As there is more work for an active fund manager to actively place trades to generate higher returns, they can charge higher fees. A passive strategy which simply keeps pace with stock market returns requires fewer trades, and therefore means that the manager should charge less. The CBI is investigating if this is indeed being carried out in practice.

The burden of proof is on the fund manager. They must be able to show that they have been actively trading and can use best practice techniques such as automated trade monitoring and auditing software to prove that they are not merely tracking the index. Savvy fund managers will take this a step further and provide data visualisations to the CBI that show fund performance when compared to an index benchmarks and additional automated data insights that show the variances between the fund and benchmark. It is clear that technology is the solution to the now ongoing burden of proof that UCITS fund managers face.

With 2000-plus Irish domiciled UCITS funds to investigate the task facing the CBI is by no means insignificant. It is therefore likely if the regulator finds proof of “index hugging” it may use all its powers, which include ongoing supervision and sanctions such as fines. For this reason UCITS fund managers need technology to lessen their burden of proof and maintain a good relationship with their regulator.


MiFID II Reporting – a year of light and shade

Claire Savage, Chief Operating Officer, AQMetrics

Following years of planning and implementation for MiFIR,  it is time to pause and consider the lessons learned from the compliance process and the ongoing considerations in this evolving regulatory environment.

The reality of being in implementation mode for MiFID II for the last two years, preceded by almost ten years of regulatory reform, is that the reporting solutions put in place have been tactical, and found lacking in certain areas. While the target goal for transaction reporting by 3 January 2018 was met by most firms, the challenge of meeting accuracy, completeness and reconciliation obligations is slowly evolving.

The National Competent Authorities (NCA) too have experienced a period of adjustment and are entering a phase of optimisation. The Central Bank of Ireland’s recently published 1refers to a three period of consolidation following the implementation of international and European regulatory reforms. This relative lull in the introduction of new regulations represents an opportunity for firms to shift their focus towards optimising solutions around MiFID II and MiFIR.

Transaction reporting in an opaque environment

MiFID firms have undertaken transaction reporting with a commonality of data challenges. The collection and verification of expanded data sets, including legal entity identifiers, personal entity identifiers, and underlying instrument classifications, is compounded with the ongoing development and enhancement of external data sources, including the ESMA Financial Instruments Reference Data System (FIRDS) and the ANNA Derivatives Service Bureau (DSB).  

Tactical solutions involving manual workarounds have been largely deployed to help counteract these challenges. However, the risk with such tactical solutions results is that transparency is compromised, change management is challenging, and it results in a fragile system, that is operationally burdensome on the compliance team.

Shining a light for the future

There is no doubt that the regulatory themed inspections will increase in 2019, with a focus on completeness, accuracy and reconciliation for transaction reporting.

For completeness, while firms cannot solely rely on FIRDS as the golden source of data,  the process for identifying reportable and non-reportable instruments can be achieved by combining FIRDS reference data with supervisory controls for listing, determination and exclusion.  

For accuracy, data management can be addressed in partnership with the ARM,  through the provision of rule-based data management that may be absent from the firms’ legacy systems. Data can be collected, validated and consolidated with third-party data in the transaction reporting solution.

For reconciliation, transparency is key. Reporting statistics and flexible search functionality can be combined with peer group analysis to provide additional data insights to the firm.

Now is the time for firms to ask the following questions both internally and to their ARM:

  • How resilient is the MiFID II transaction reporting solution?
  • How can I consolidate this reporting with other areas of regulation?
  • How can I improve the processes and the controls within my firm to manage these regulations so that I am managing them with a common supervisory control portal?

The changing light

In parallel, this phase of optimisation is likely to be interwoven with shifting priorities in the european regulatory authorities.

In its strategic plan, the Central Bank of Ireland stated that ‘for MiFID firms, the landscape is changing’ and that the focus for regulators would be on ‘third party outsourcing, critical business operations, financial and technology information and, of course, Brexit’.

The UK has published a draft 2 to ensure the MiFID II and MiFIR regime works after Brexit. This will impact the transaction reporting requirements for both UK firms and European Economic Area firms with UK branches themselves and UK branches of European Economic Area firms. UK branches of EEA firms will potentially be subject to a double reporting requirement in some cases, and will need to adapt their reporting solution to facilitate transaction reporting to both the FCA and their home state NCA.

What is assured though, is that the EU will continue to take all steps necessary to protect its market. With MiFID III on the horizon,  there is no doubt that there are shades of grey ahead. Now is the time to pause, reflect and optimise. The tactical implementations may have served their purpose in 2018, but for 2019 onwards, a more strategic approach is required. 

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Blog, Buzz, Press

AQMetrics recognised in top 100 RegTech firms for second year running

DUBLIN and London, 29 November 2018AQMetrics, the award-winning provider of regulatory compliance and risk solutions, is honoured to be included in the RegTech 100, as one of the world’s most innovative RegTech companies.

The RegTech 100 list acknowledges companies for their innovative use of technology to solve a significant industry problem, or to generate cost savings or efficiency improvements across the compliance function. A panel of analysts and industry experts evaluated 824 companies to arrive at this year’s list, which at nearly double the number of companies in consideration last year, highlights the rapid growth and competitive nature of the RegTech industry.

“To once again be listed as one of the top 100 RegTech companies is a vindication of our vision to become the leading Global RegTech company,” said AQMetrics CEO Geraldine Gibson. “Our commitment is to continue scaling the AQMetrics online and mobile platform for global risk and regulatory reporting solutions. We believe that AQMetrics connected platform is the foundation for solving the regulatory burden faced by our wide range of customers from banks through to individual investment managers.”

A full list of the RegTech 100 is available at

About AQMetrics

AQMetrics is a leading RegTech company focused on delivering regulatory risk and compliance solutions for financial professionals. We recognized that the accepted methods of managing risk and compliance were slow, outmoded, and inefficient. We drew upon our team’s deep experience in innovation, technology, law, and financial services to build a platform that performed markedly better, helping our clients leverage technology to more efficiently meet regulatory obligations. The AQMetrics platform has been tested, proven and perfected.

More information is available at or follow us on Twitter @AQMetrics

Media contact
Phoebe Toal, AQMetrics,

Blog, Buzz

Meet the Team- Jody Collins

At AQMetrics we have a highly skilled, experienced and diverse workforce with wide ranging backgrounds.

Each month, we introduce you to a member of our team. This month it’s Jody Collins from our Customer Success team.



Jody Collins, Product Analyst, Customer Success Team.

Describe your job in three words:

Agile, Diverse, Collaborative

What is the most exciting thing you are working on?

I like bringing new AQMetrics products to customers and exceeding their expectations. Working with customers to draw out their requirements and feeding this into our product road map, is a key part of my role.

How has your background helped with your role in AQMetrics?

My background in computer science and my broad experience in business intelligence has positioned me well for this analyst role on the customer success team. I have a passion for seeing customers’ desired outcomes realised as part of the product road map process.

Best thing about working in AQMetrics?

Meeting and talking with customers on a daily basis and working within the close knit, supportive AQMetrics team.

Who would you most like to swap places with for the day and why?

Tim Ferris because he delves into areas that are completely new to him. On his podcast, he probes his interviewees so effectively, and has an exciting role as an angel investor in some really innovative startups.

Last book you read?

Michael Lewis Flash Boys, about high frequency trading.

Website you visit the most?, for home decor inspiration.

Tell us something we don’t know about you. 

I have travelled to 30 countries, my favourite being the Philippines.  


How the new Securitisation Regulation 2017/2402/EU will impact AIFMs and UCITS in 2019.

Regulation (EU) 2017/2402 (Securitisation Regulation) introduces new internal monitoring and reporting challenges for institutional investors. EU AIFMs are already subject to internal monitoring and reporting in relation to securitisation positions under the EU Alternative Investment Fund Managers Directive 2011/61/EU (AIFMD). As of January 1, 2019, due diligence, transparency, and risk retention requirements will also impact both UCITS and non-EU AIFs in securitisation positions. How will they be impacted is the question that we look to answer here.

It is worth noting that from 2019 on, if an institutional investor (such as an AIFM or UCITS manager) delegates responsibility for fulfilling due diligence, monitoring, and reporting requirements, then any sanctions may be imposed on the delegate rather than the institutional investor.

With the possibility of sanctions in mind, institutional investors and their delegates will need to use systems to verify that the originator of credit has also used an effective system to stress the underlying exposures and, in so doing, ensure that the credit is sound. Just as the money laundering directives brought rules-based systems to the fore for money laundering reporting officers (MLROs) and compliance officers, rules-based systems will also now be at the fore for both AIFMs and UCITS managers to robustly support securitisation due diligence checks.

A robust rules system will combine factor analysis with exposure calculations for risk assessment; have rules based on specific limits (such as the 5% rule which is applied to verify that the sponsor, originator and original lender retains at least 5% economic interest throughout the securitisation’s lifetime); and perform stress tests.

Data points required for rules analysis will no doubt extend further than the payment, credit and liquidity details captured today. Further data analytics will be required to capture cash flow trends, late repayment trends, default rates and frequency of loan modifications.

Once the data and data analytics are in place, institutional investors will further require management and regulatory reports on securitised positions and associated exposures. It is anticipated that from 2019 onwards, regulators will increase their interest in the verification workflows, audit trails and record retention of AIFMS and UCITS managers with regards to securitised positions. Automated corrective action workflows will somewhat support the institutional investors, however manual tasks will still be required to ensure that the UCITS manager acts in the best interest of the investors at all times and that the AIFM has truly validated that its corrective action is the best course of action available at a specific point in time. No doubt regulators will look for proof that these manual tasks were completed and that even data pertaining to manual tasks was comprehensively and consistently captured in a robust system.

To date, neither UCITS firms nor non-EU AIFMs may have given much thought to how best to comply with the securitisation regulation, but that must change by January 2019. Systems with rules engines, workflow, audit trails and reporting will become the new norm for UCITS and non-EU AIFMS going forward.