EC Issues Strategy to Modernize Reporting of Data in Financial Sector

The aim the EC strategy is to modernize supervisory reporting in the European Union and to put in place a system that delivers accurate, consistent, and timely data to supervisory authorities at the Union and national levels, while minimizing the aggregate reporting burden for all relevant parties. This strategy will contribute directly to the objectives of the European Data Strategy and the Digital Finance package to promote digital innovation in Europe and to further the objectives of a Capital Markets Union. The fitness check of the supervisory reporting requirements concluded that there are inefficiencies and gaps in the way these requirements are defined in the European Union law and data are collected. This can have an effect on the ability of authorities to perform their supervisory functions. It also generates unnecessary costs for companies and does not allow full use to be made of modern digital technologies. However, digital technologies, including the supervisory technologies or suptech, have the potential to significantly reduce the reporting burden for companies and allow supervisors to gain insights from the reported data more effectively and efficiently. Thus, EC is proposing the Supervisory Data Strategy to address the shortcomings identified in the fitness check and to enable supervisory authorities to seize the opportunities of data-driven supervision. This strategy has the following four main building blocks:

• Ensuring consistent and standardized data that relies on clear and common terminology as well as on common standards, formats, and rules.
• Facilitating the sharing and re-use of reported data among supervisory authorities by removing undue legal and technological obstacles to avoid duplicative data requests.
• Improving the design of reporting requirements by developing guidelines based on best practices in applying better regulation principles in supervisory reporting.
• Putting in place joint governance arrangements to improve coordination and foster greater cooperation between different supervisory authorities (such as the European Supervisory Authorities, the European Central Bank, the Single Resolution Board, and the European Systemic Risk Board) and other relevant stakeholders, allowing them to share their expertise and to exchange information.

A common data dictionary is also part of the discussion, among other factors. The data dictionary will be a repository containing a description of the content and format of all data collected under various reporting frameworks in a structured, comprehensive, consistent and unambiguous manner, using terms anchored in legislation to establish a clear link between collected data items and the relevant legislative requirements. Another aspect of this strategy relates to the development of the supervisory data space, which aims to ensure that the data is reported only once and then shared and reused as needed by the different authorities overseeing the financial system in the European Union. EC has already proposed targeted amendments in certain legislation (for example, the Review of the Alternative Investment Fund Managers Directive (AIFMD) and the October 2021 Banking Package) to facilitate efficient sharing and reuse of data by authorities. Working with the European Supervisory Authorities (ESAs) and other authorities, EC will, by 2023, review the relevant legislation to identify other legal obstacles to data-sharing and stands ready to address them, where necessary. 

Related Links

• Press Release
• Text of Communication
• Questions and Answers
• Results of Reporting Fitness Check
• European Data Strategy

Keywords: Europe, EU, Banking, Insurance, Securities, PMI, Reporting, Suptech, Regtech, Common Data Dictionary, Basel, Supervisory Data Space, EC, EBA, ESAs