Testing times
28 Jun 2023
Stuart Hartley, managing director of Qomply, talks to Jenna Lomax about why system testing is an industry must, and how automatic regression testing can clear the pathway toward customer satisfaction and regulatory compliance
Image: Qomply
Regulatory reporting software service Qomply was founded by Stuart Hartley and Michelle Zak in 2019. The company was set up to identify a gap in the market caused by MiFID/MiFID II when the regulation became a challenge for many small- to mid-sized firms. More than four years on, Qomply’s software also responds to SFTR, EMIR and ASIC requirements.
The company houses the Qomply ReportAssure Diagnostic Auditor & Reconciler, which audits and reconciles transaction reports, and QomplyDirect, which enables direct reporting to the UK Financial Conduct Authority (FCA), among others.
Qomply’s solutions are extensive and there’s a lot to talk about, however Hartley, managing director of the company, takes this opportunity to discuss system testing and how it can help clients keep up with compliance.
“The importance of system testing for financial regulations cannot be overstated,” he outlines. “As regulations change, it is essential that firms test their systems to ensure that they are compliant with the latest requirements. This can be a complex and challenging task, but it is essential to get it right.
“This may seem obvious, but it is important to have a clear understanding of the regulations that apply to your firm — particularly the specific requirements and the penalties for non-compliance. Once you understand the regulations, you can start to develop a testing strategy.”
Having started his career at Salomon Brothers, Hartley worked with investment banks such as Credit Suisse, HSBC and BNP Paribas. He has held roles ranging from software developer and business analyst to project manager and operations manager. In addition, he has particular expertise in the development of integrated control frameworks and trade processing systems across asset classes.
Hartley has built his career in parallel with the increasing digitalisation of the financial services industry, and affirms that one of the most important parts of a modern testing strategy is the inclusion of automation.
“Automation can help to streamline the testing process and improve the efficiency of testing,” he says. “There are a number of automated testing tools available that can be used to test for compliance with financial regulations. Qomply’s specialist tools, in the field of transaction reporting, can aid regression testing. In addition, new regulations are covered through Qomply’s up-to-date rule engines.”
Back to the beginning
One regulation not considered ‘new’ is of course MiFID, which provides a legal framework for securities markets. As aforementioned, Qomply’s conception came in response to the challenges that MiFID created for financial services firms of all sizes.
“The regulation placed a significant burden on compliance resources, and many firms simply didn’t have the capacity to meet the new requirements,” Hartley reflects. “While some changes have since been put forward by the European Commission, such as the simplification of the rules on research unbundling, there are still substantial challenges facing firms.”
He adds: “Qomply has seen firms address these challenges by shifting from a reactive to a proactive approach. There has been a greater emphasis on data and analytics to support compliance decisions, and an increase in the use of technology to automate compliance processes. These changes are likely to continue in the future, as regulators seek to ensure that the financial markets are fair, transparent and efficient.”
From his extensive tenure in the financial services industry, Hartley has learned that system testing is often seen as a ‘necessary evil’. Although it can help to prevent penalties and increase compliance, there is an industry hesitancy to complete it or, in some cases, even start it. The hesitance stems from a multitude of reasons.
“Change aversion can arise from a resistance to modify existing systems and processes due to concerns about disrupting operations or incurring additional costs,” Hartley says. “Implementing system testing may require allocating resources, training employees or adopting new technologies.
“Fear of venturing into the unknown is another contributing factor. Testing involves exploring potential issues, identifying vulnerabilities and exposing weaknesses in systems. This can be an uncomfortable process for some companies, as it may reveal flaws or gaps that need to be addressed. There might be concerns about the impact on regulatory compliance.”
He adds: “To overcome these perceptions, it is important for companies to understand the benefits of system testing. It can improve the reliability, performance and security of their systems which should lead to enhanced customer satisfaction, regulatory compliance and reduced operational risks.”
Automatic regression testing
To open up a pathway toward such customer satisfaction and regulatory compliance, automatic regression testing can assist financial service firms to make updates or enhancements to their systems or models.
“These changes can be technological, driven by regulations or by a system’s evolution,” explains Hartley. “By running automated tests on the existing system or model after changes are made, firms can identify any regression issues and ensure that the updated system or model still functions as intended.”
“Automating regression testing saves time and reduces the need for manual effort, allowing firms to make updates or enhancements more efficiently. It also cuts down on costs associated with manual testing.”
Costs related to regulatory compliance and mitigating operational risk are nothing new. As Hartley explains, “financial firms often need to deliver updates or enhancements to their systems or models in a timely manner to remain competitive.”
To ensure industry-wide compliance, regulators’ calls for firms to update their operational systems grew louder after the 2008 financial crisis. In the current economic climate, this expectation runs side by side with interest rate hikes, exacerbated by the continuing war in Europe.
In addition, with T+1 implementation now less than a year away, robust systems will be needed to help firms manage the transition.
Automatic regression testing enables “quicker testing cycles and faster time to market,” affirms Hartley — something that will be particularly helpful in a post T+1 world, no doubt.
“Automatic regression testing allows firms to validate the changes and ensure the overall system integrity without relying solely on manual testing, thereby expediting the release process,” he adds.
Never-ending exercise
The road to system implementation can pave over potholes or flatten out speed bumps, but the race to meet compliance can be considered a never-ending exercise. What are the main benefits of reaching the metaphorical finish line and how can Qomply help?
“The financial services industry has strict regulatory requirements,” says Hartley. “Qomply provides an up-to-date diagnostic solution that can confirm the changes made against the regulations.”
“By thoroughly testing different functionalities and scenarios, system testing helps identify defects, bugs or inconsistencies that can impact the quality of the system. Detecting and addressing issues early in the development lifecycle can save significant costs and time. In addition, companies can avoid paying for expensive fixes later in the reporting process.”
Hartley concludes: “Qomply is committed to helping firms navigate industry changes and providing the compliance solutions needed to succeed.”
The company houses the Qomply ReportAssure Diagnostic Auditor & Reconciler, which audits and reconciles transaction reports, and QomplyDirect, which enables direct reporting to the UK Financial Conduct Authority (FCA), among others.
Qomply’s solutions are extensive and there’s a lot to talk about, however Hartley, managing director of the company, takes this opportunity to discuss system testing and how it can help clients keep up with compliance.
“The importance of system testing for financial regulations cannot be overstated,” he outlines. “As regulations change, it is essential that firms test their systems to ensure that they are compliant with the latest requirements. This can be a complex and challenging task, but it is essential to get it right.
“This may seem obvious, but it is important to have a clear understanding of the regulations that apply to your firm — particularly the specific requirements and the penalties for non-compliance. Once you understand the regulations, you can start to develop a testing strategy.”
Having started his career at Salomon Brothers, Hartley worked with investment banks such as Credit Suisse, HSBC and BNP Paribas. He has held roles ranging from software developer and business analyst to project manager and operations manager. In addition, he has particular expertise in the development of integrated control frameworks and trade processing systems across asset classes.
Hartley has built his career in parallel with the increasing digitalisation of the financial services industry, and affirms that one of the most important parts of a modern testing strategy is the inclusion of automation.
“Automation can help to streamline the testing process and improve the efficiency of testing,” he says. “There are a number of automated testing tools available that can be used to test for compliance with financial regulations. Qomply’s specialist tools, in the field of transaction reporting, can aid regression testing. In addition, new regulations are covered through Qomply’s up-to-date rule engines.”
Back to the beginning
One regulation not considered ‘new’ is of course MiFID, which provides a legal framework for securities markets. As aforementioned, Qomply’s conception came in response to the challenges that MiFID created for financial services firms of all sizes.
“The regulation placed a significant burden on compliance resources, and many firms simply didn’t have the capacity to meet the new requirements,” Hartley reflects. “While some changes have since been put forward by the European Commission, such as the simplification of the rules on research unbundling, there are still substantial challenges facing firms.”
He adds: “Qomply has seen firms address these challenges by shifting from a reactive to a proactive approach. There has been a greater emphasis on data and analytics to support compliance decisions, and an increase in the use of technology to automate compliance processes. These changes are likely to continue in the future, as regulators seek to ensure that the financial markets are fair, transparent and efficient.”
From his extensive tenure in the financial services industry, Hartley has learned that system testing is often seen as a ‘necessary evil’. Although it can help to prevent penalties and increase compliance, there is an industry hesitancy to complete it or, in some cases, even start it. The hesitance stems from a multitude of reasons.
“Change aversion can arise from a resistance to modify existing systems and processes due to concerns about disrupting operations or incurring additional costs,” Hartley says. “Implementing system testing may require allocating resources, training employees or adopting new technologies.
“Fear of venturing into the unknown is another contributing factor. Testing involves exploring potential issues, identifying vulnerabilities and exposing weaknesses in systems. This can be an uncomfortable process for some companies, as it may reveal flaws or gaps that need to be addressed. There might be concerns about the impact on regulatory compliance.”
He adds: “To overcome these perceptions, it is important for companies to understand the benefits of system testing. It can improve the reliability, performance and security of their systems which should lead to enhanced customer satisfaction, regulatory compliance and reduced operational risks.”
Automatic regression testing
To open up a pathway toward such customer satisfaction and regulatory compliance, automatic regression testing can assist financial service firms to make updates or enhancements to their systems or models.
“These changes can be technological, driven by regulations or by a system’s evolution,” explains Hartley. “By running automated tests on the existing system or model after changes are made, firms can identify any regression issues and ensure that the updated system or model still functions as intended.”
“Automating regression testing saves time and reduces the need for manual effort, allowing firms to make updates or enhancements more efficiently. It also cuts down on costs associated with manual testing.”
Costs related to regulatory compliance and mitigating operational risk are nothing new. As Hartley explains, “financial firms often need to deliver updates or enhancements to their systems or models in a timely manner to remain competitive.”
To ensure industry-wide compliance, regulators’ calls for firms to update their operational systems grew louder after the 2008 financial crisis. In the current economic climate, this expectation runs side by side with interest rate hikes, exacerbated by the continuing war in Europe.
In addition, with T+1 implementation now less than a year away, robust systems will be needed to help firms manage the transition.
Automatic regression testing enables “quicker testing cycles and faster time to market,” affirms Hartley — something that will be particularly helpful in a post T+1 world, no doubt.
“Automatic regression testing allows firms to validate the changes and ensure the overall system integrity without relying solely on manual testing, thereby expediting the release process,” he adds.
Never-ending exercise
The road to system implementation can pave over potholes or flatten out speed bumps, but the race to meet compliance can be considered a never-ending exercise. What are the main benefits of reaching the metaphorical finish line and how can Qomply help?
“The financial services industry has strict regulatory requirements,” says Hartley. “Qomply provides an up-to-date diagnostic solution that can confirm the changes made against the regulations.”
“By thoroughly testing different functionalities and scenarios, system testing helps identify defects, bugs or inconsistencies that can impact the quality of the system. Detecting and addressing issues early in the development lifecycle can save significant costs and time. In addition, companies can avoid paying for expensive fixes later in the reporting process.”
Hartley concludes: “Qomply is committed to helping firms navigate industry changes and providing the compliance solutions needed to succeed.”
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