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
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In a letter addressed to the industry, the Australian Prudential Regulation Authority (APRA) set out an updated schedule of policy priorities for the banking, insurance, and superannuation industries.
The European Commission (EC) adopted a comprehensive review package of Solvency II rules in the European Union.
The Office of the Comptroller of the Currency (OCC) issued Versions 1.0 of the "Earnings" and "Regulatory Reporting" booklets of the Comptroller's Handbook.
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The European Banking Authority (EBA) published a report on the use of digital platforms in the banking and payments sector in European Union.
The Hong Kong Monetary Authority (HKMA) published updates on the policy measures that were announced in context of the ongoing pandemic.
The International Swaps and Derivatives Association (ISDA), along with several other associations, submitted a joint response to the Basel Committee on Banking Supervision (BCBS) consultation on preliminary proposals for the prudential treatment of cryptoasset exposures.
BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.
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