FCA and BoE outlined the plans to develop their data and analytics capabilities. As part of this, BoE published a discussion paper on transforming data collection from the financial sector in UK to improve the timeliness and effectiveness of data collection from firms across the financial system. The comment period for the discussion paper ends on April 07, 2020. FCA also published its refreshed Data Strategy, which sets out its transformation plan to become a highly data-driven regulator. The strategy outlines the increased focus of FCA on the use of advanced analytics and automation techniques to deepen its understanding of how markets function and allow the FCA to efficiently predict, monitor, and respond to firm and market issues. In addition, FCA, BoE, and seven regulated firms jointly published a report on Phase 2 viability assessment of the Digital Regulatory Reporting, or DRR, pilot.
Phase 2 Viability Assessment of Digital Regulatory Reporting
The Digital Regulatory Reporting will potentially allow firms to automatically supply data requested by the regulators, thus reducing the cost of collection, improving data quality, and reducing the burden of data supply on the industry. The Viability Assessment Report examines the technological and economic factors that may impact a shift toward more automation in regulatory reporting. This Viability Assessment reflects the work undertaken in this second phase of the pilot, but also draws on the lessons and insights from Phase 1. The focus of Phase 2 of the Digital Regulatory Reporting pilot was partly to gather information and conduct analysis to provide decision makers with information to determine whether continued investment in Digital Regulatory Reporting is warranted and to identify any gaps that need closing before any potential implementation, while exploring the potential technical solutions for Digital Regulatory Reporting.
The viability assessment concludes that work on analyzing the business case for the Digital Regulatory Reporting is incomplete. Additional work is needed to understand the costs of setting up and running Digital Regulatory Reporting—particularly for regulators. More evidence is also needed to get a clearer picture of the benefits Digital Regulatory Reporting would bring. As work on the technical solutions shows, a number of unknowns still exist for how best to implement the Digital Regulatory Reporting technically. The scenario analysis suggests that the benefits of Digital Regulatory Reporting may be higher if it is rolled out across a number of reporting areas or as part of a coordinated change to a set of reports. In domains, such as derivatives and mortgages, this may involve coordination between multiple authorities. Therefore, for the full benefits of Digital Regulatory Reporting to be realized, a strategic commitment to Digital Regulatory Reporting by firms and regulators may also be required. Following this report, BoE and FCA have committed to continue to work together to:
- Explore joint work on common data standards
- Commission a joint review of the legal implications of writing reporting instructions as code
- Commission a joint independent review of some of technical solutions explored as part of the Digital Regulatory Reporting pilot
- Collaborate closely while engaging with industry and planning future phases
Discussion Paper on Transforming Data Collection by BoE
The discussion paper published by BoE is instead focused on improving the timeliness and effectiveness of data collection from firms across the financial system. Its scope covers all of the BoE's structured data collections from firms, not just regulatory data. BoE invites both large and small firms to work with it to develop a new approach to reporting, with the aim of improving system-wide efficiency and the effectiveness of analysis. The discussion paper explores and develops the ideas set out in the Future of Finance report, some of which BoE has already been investigating through its involvement, with the FCA, in a pilot on Digital Regulatory Reporting. This paper also sets out the issues facing the current data collection system and identifies and explores a series of potential solutions, to prompt feedback from, and further discussion with, industry.
For the proposals in this discussion paper, BoE welcomes responses and input from a wide range of stakeholders, including regulated firms, industry bodies, specialist third-party providers, professional advisors, standards bodies, and other regulators. Responses may be shared with FCA. In addition to seeking written responses to the discussion paper, BoE intends to establish one or more industry working groups to explore these issues during 2020. Subject to responses to this paper, the aim of BoE for the working group(s) over the course of 2020 would be to develop a collective vision for data collection reforms over a 5-10 year horizon and to develop proposals for immediate next steps that would move from pilots to live implementation. BoE expects to publish an update on responses and the proposed next steps during 2020.
Comment Due Date: April 07, 2020 (PRA Discussion Paper)
Keywords: Europe, UK, Banking, Insurance, Securities, Fintech, Data Collection, Digital Regulatory Reporting, Regtech, Suptech, Reporting, FCA, BoE
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The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.