Regulatory

The European ESG Template (EET) is a standardized template developed by the EU FinDatEx working group that standardizes the ESG-related data exchange of financial products and supports compliance with regulatory requirements – such as the Disclosure Regulation (SFDR). Taking into account the applicable regulatory ESG data requirements, we offer a solution for creating the EET template that meets the FinDatEx requirements.

The processing of raw ESG data, the enrichment of customer-specific information and the calculation of Principal Adverse Impact (PAI) indicators are key components of the solution and are supplemented by data validation and distribution options.

Due to the implementation of the Financial Markets Amendment Act (Finanzmarktnovellierungsgesetz – FimanoG) in German law, the EU PRIIPs regulation must also be complied with. This presents an enormous challenge for providers of packaged retail and insurance-based investment products, or PRIIPs for short.

labs.PRIIPs is implemented in conjunction with the labs.DWH. It comprises a data model, a workflow manager and a portal with manual maintenance options. The data model is available for data retention, with all processes being managed by a special workflow manager. Additional KID components, such as text boilerplates, may either be entered via the maintenance portal or added via the data import function.

All data is harmonised using labs.DWH, a data warehouse which was developed specifically for finance companies. All processes are managed by the labs.FLOW Workflowmanager. The Workflowmanager includes a data connector which directly accesses the database of the primary accounting system (e.g. SimCorp Dimension ^©, Xentis^© or similar) and extracts all the relevant data. If further data is required for the calculations and this is not in the primary accounting system, it can also be extracted from the relevant data sources.

labs PRIIPs also provides the European PRIIPs Template (EPT), a minimum set of required information on investment funds for insurance companies.

The EPT is created in the latest version of the template published by FinDatEx (Financial Data Exchange). FinDatEx was founded in 2019 by representatives of the European financial services sector to support the development and use of standardized technical templates for data exchange between product manufacturers, distributors and other stakeholders in the application of EU legislation.

The benefits of labs.PRIIPs at a glance:

• Easy integration of available source systems
• Significant reduction in process costs
• Increase in process security
• Standardisation of workflows
• Multilingual
• Extensive reporting functions
• Extensive analysis functions

Financial product distributors must provide their customers with additional information on the target market and the cost transparency of the investment funds distributed. This information is described in the European MiFID Template (EMT), which can be used to transmit the relevant data to distributors.

The EMT is created in the latest version of the template published by FinDatEx (Financial Data Exchange). FinDatEx was founded in 2019 by representatives of the European financial services sector to support the development and use of standardized technical templates for data exchange between product manufacturers, distributors and other stakeholders in the application of EU legislation.

labs EMT is implemented in conjunction with the labs DWH. It consists of a data model, a workflow manager and a portal with manual maintenance options. The data model is available for data management and all processes are controlled by a special workflow manager. Other EMT components such as text modules can either be entered via the maintenance portal or added via data import.

The entire data harmonization takes place via the labs DWH, a data warehouse developed specifically for financial companies. All processes are controlled by the labs FLOW workflow manager. Within the workflow manager is the data connector, which directly accesses the database of the primary accounting system (e.g. SimCorp Dimension©, Xentis© or others) and transfers all relevant data. If further data is required for the calculations and this is not available in the primary accounting system, it can also be taken from the corresponding data sources.

The Alternative Investment Fund Managers Directive (AIFMD) sets standards for AIFs and AIFMs in relation to marketing, raising private capital, remuneration policy, risk monitoring and reporting, and general accountability.

The main objective of the AIFMD is to protect investors and reduce some of the systemic risk that alternative investment funds can pose to the EU and its economy.

The addressee of the reports to be prepared is the respective responsible supervisory authority at the registered office of the custodian company.

The AIFMD templates are defined by the requirements of ESMA. The information is broken down into AIFM (information on the fund manager) and AIF (information on the fund).

labs AIFMD is implemented in conjunction with the labs DWH. It consists of a data model, a workflow manager and a portal with manual maintenance options. The data model is available for data management and all processes are controlled by a special workflow manager.

The entire data harmonization takes place via the labs DWH, a data warehouse developed specifically for financial companies. All processes are controlled by the labs FLOW workflow manager. Within the workflow manager is the data connector, which directly accesses the database of the primary accounting system (e.g. SimCorp Dimension©, Xentis© or others) and transfers all relevant data. If further data is required for the calculations and this is not available in the primary accounting system, it can also be taken from the corresponding data sources.

Markets in Financial Instruments Regulation

Being a European regulation, MiFIR has direct effect. It creates the option for national supervisory authorities across Europe to prohibit or restrict the distribution and sale of financial instruments.

The obligation to report transactions under MiFIR requires securities firms which conduct transactions with financial instruments to report “complete and accurate details of such transactions to the competent authority as quickly as possible and no later than the close of the following working day.”

According to MiFIR, trading venue operators (including operators of multilateral and organised trading facilities) must report transactions which are done on their respective platforms if these transactions are executed using their systems and done so by an investment firm which is not subject to the regulation.

The following information must be reported:

• Detailed identification of the buyer and seller for each transaction. In particular, the regulation requires an LEI number (company ID) to be provided.
• Identification of the decision makers at the seller and the buyer if a third party with a discretionary mandate is involved.
• Identification of the person or algorithm who/which is responsible for making the investment decision or executing the transaction at the reporting company.

In view of the complexity of reports, it is recommended to use an ARM (Approved Reporting Mechanism) to report your transactions.

UI labs adheres to the technical specifications set by MarketAxess as ARM. We have the appropriate policies, arrangements and technical capacity to receive notifications of transactions from investment firms and to return information to those firms.

All relevant data is transported from the front office system to the data warehouse, fully processed and transmitted to BaFin via MarketAxess (ARM). The entire process is monitored by UI labs and Customer Service to ensure correct reporting according to ART. 26.