FCA published results of the phase 1 of a pilot project on the Digital Regulatory Reporting. The pilot explored how firms and regulators could use technology to make the current process of regulatory reporting more accurate, efficient, and consistent. The report sets out the context for this project, describes the current approach to regulatory reporting, and provides information about objectives of the pilot and how it was organized and its objectives. It then offers an overview of the Digital Regulatory Reporting vision and the prototype developed. Finally, the report sets out the key findings of this pilot phase, along with the planned next steps.
During 2018, FCA and BoE collaborated with Barclays, Credit Suisse, Lloyds, Nationwide, NatWest, and Santander to conduct a six-month pilot on Digital Regulatory Reporting. The pilot broke down regulatory reporting into three tightly linked but independent processes: converting regulation into code (machine-executable regulation), defining standardized firm data, and developing a system to allow automated creation of regulatory reports by executing machine-executable regulation against standardized firm data. The pilot team used distributed ledger technology to quickly build a prototype that incorporated all three processes. The pilot considered two use cases—namely, UK domestic mortgage reporting and calculation of the common equity tier 1 ratio.
The pilot process has built a better understanding both of how Digital Regulatory Reporting could potentially be delivered and the potential challenges of a roll out of Digital Regulatory Reporting for both regulators and firms. Among others, the pilot found that, for regulatory reporting to be automated, the instructions need to be provided as a code that references data provided by firms. FCA, BoE, and a group of regulated institutions will be participating in a second phase of the pilot. The second phase aims to identify which regulatory reports are appropriate for a Digital Regulatory Reporting solution, whether there is value in investing in Digital Regulatory Reporting, how best to create machine-executable regulation, and if and how to efficiently standardize firm data. The regulated institutions to be involved in this second phase include Barclays, Credit Suisse, HSBC, NatWest, Santander, and Lloyds Banking Group.
Keywords: Europe, UK, Banking, Insurance, Securities, Digital Regulatory Reporting, Regtech, Suptech, Reporting, DLT, NLP, Phase 1, BoE, FCA
FCA and PRA in the UK, FED in the US, and the authorities in Singapore have fined Goldman Sachs for risk management failures in connection with the 1Malaysia Development Berhad (1MDB).
BCBS announced that OSFI and the Bank of Canada hosted the 21st International Conference of Banking Supervisors (ICBS) virtually on October 19-22, 2020.
FCA proposed guidance on how firms should continue to seek to help customers who hold insurance and premium finance products and may be in financial difficulty because of COVID-19, after October 31, 2020.
EBA issued an opinion on prudential treatment of the legacy instruments as the grandfathering period nears an end on December 31, 2021.
ESRB published the fifth issue of the EU Non-bank Financial Intermediation Risk Monitor 2020 (NBFI Monitor).
HM Treasury announced that the new Financial Services Bill has been introduced in the Parliament.
APRA announced that it has increased the minimum liquidity requirement of Bendigo and Adelaide Bank for failing to comply with the prudential standard on liquidity.
PRA published the consultation paper CP17/20 to propose changes to certain rules, supervisory statements, and statements of policy to implement elements of the Capital Requirements Directive (CRD5).
US Agencies adopted a final rule that applies to advanced approaches banking organizations and aims to reduce interconnectedness in the financial system as well as to reduce contagion risks associated with the failure of a global systemically important bank (G-SIB).
US Agencies (FDIC, FED, and OCC) adopted a final rule that implements the net stable funding ratio (NSFR) for certain large banking organizations.