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Investment comes as market participants prepare to comply with a raft of new post-trade reporting rules in Europe, North America and APAC
Deutsche Börse and Illuminate Financial Management LLP have co-led in a US$5 million Series A funding round in RegTek.Solutions Inc., a multi-jurisdiction regulatory reporting solutions provider.
Based in New York, RegTek.Solutions was launched earlier this year as a specialist provider of global regulatory compliance software by Risk Focus Inc., the risk and regulatory services firm. RegTek.Solutions provides innovative trade reporting solutions and cost-effective compliance software (“Report-It”) enabling firms to improve the quality, transparency and control of regulatory reporting obligations across multiple jurisdictions and asset classes, including OTC Swaps, Credit, Rates and Equity, as well as FX and Commodities trading. The firm counts ten of the G15 banks among its client base.
For Deutsche Börse this investment will be managed by DB1 Ventures, the corporate venture capital arm of the market infrastructure provider. Holger Wohlenberg, Managing Director and Head of Market Data and Services at Deutsche Börse, and Mark Beeston, Managing Partner from Illuminate Financial, will become non-executive board members of RegTek.Solutions.
Brian Lynch, CEO, RegTek.Solutions Inc. commented:
Receiving strong financial backing from global exchange Deutsche Börse and capital markets specialists Illuminate Financial serves as a real validation of our offering and prospects for future growth. As the next bottleneck of regulatory deadlines nears and both sell-side and buy-side firms grapple with adhering to the new rules, we are seeing strong demand across the market for outsourced trade reporting tools that provide assurance and transparency around data quality, completeness and accuracy.
Ankur Kamalia, MD & Head of Venture Portfolio Management and DB1 Ventures, Deutsche Börse, added:
In the new regulatory landscape, RegTek.Solutions has established itself as a reliable service provider with deep insight of regulatory topics. While we have already been working with the team for some time to enrich our Regulatory Reporting Hub, the investment will help us deepen our relationship with RegTek.Solutions and enable the firm to service clients required to validate, report and reconcile trade data.
Mark Beeston, Managing Partner, Illuminate Financial Management LLP commented:
RegTek.Solutions offers deep domain knowledge and technical capabilities within the post-trade space. A perfect storm of new reporting rules from multiple regulators, as well as the inclusion of the buy-side under MIFID II requirements, make this a key strategic priority within our capital markets focused fund. We look forward to working closely with the team at RegTek.Solutions and Deutsche Börse to effectively scale the business.
The strategic investment in exchange for a minority stake will be used to scale RegTek.Solutions’ operations as market participants seek to comply with incoming multi-jurisdictional reporting requirements such as MiFID II / MIFIR in Europe, Dodd Frank with the impending SEC implementation and potential new CFTC rules in North America, as well as ongoing change in Hong Kong, Singapore and other global jurisdictions.
Under MiFID II, asset managers and other buy-side institutions will become liable for their own trade and transaction reporting for the first time. With the number of reportable fields set to increase from 23 to 65, the need for these institutions to implement MIFID II compliant trade reporting systems before the January 2018 deadline has become paramount. This strategic investment will enable RegTek.Solutions to meet demand among this client segment who require secure outsourced solutions that can be quickly implemented and can benefit from scalable solutions that many top tier sell-side organisations already trust.