ISDA Publishes Paper on Digital Regulatory Reporting
The International Swaps and Derivatives Association (ISDA) published a paper that reviews the benefits of digital regulatory reporting (DRR) and takes stock of the initiatives underway in this area.
The paper highlights the work of ISDA and market participants that will enable all firms to implement regulatory reporting rules consistently using the open-source Common Domain Model (CDM). Policy-makers have launched several DRR-related initiatives in recent years that have involved collaboration with market participants. These include pilots and projects by the Financial Conduct Authority (FCA) and Bank of England (BoE), G20 TechSprint initiative, a European Commission (EC) tender to develop machine-readable and executable reporting (MRER) as a proof of concept, and the Bank for International Settlements (BIS) Innovation Hub’s Project Ellipse. The adoption of digital regulatory reporting can bring multiple benefits for both industry participants and regulators, as part of which:
- Regulated entities can automatically execute new and amended regulatory reporting rules using an industry-led standardized interpretation of the regulation as free open-source code.
- Regulators can publish reporting rules as executable code that can be automatically read and interpreted by reporting entities’ IT systems, improving the reporting process across asset classes.
- There will be an industry-led standardized interpretation of the regulation published as code that each firm can implement in its systems.
- Firms will be able to save time, resources, and budget, as they will not need to individually interpret the reporting rules.
- Consistency of how rules are interpreted and implemented across market participants will improve.
- A standardized interpretation of regulations will promote greater alignment between regulators and market participants.
- Improved data quality will enhance regulatory supervision of the markets.
- Reporting can be consistently applied across jurisdictions and used for reporting of different asset classes.
- Digital regulatory reporting could enable regulators to automatically query the underlying transaction data and generate regulatory metrics referencing the standardized data.
ISDA also announced that it has won the Innovation in Technology category in Risk Awards 2022, for the ISDA Standardized Approach Benchmarking initiative. Its benchmarking offering provides users with detailed analysis to support the consistent and accurate implementation of capital models under the standardized approaches for market risk, credit valuation adjustment risk, and counterparty credit risk. The initiative is powered by the in-house technology platform, Perun, which leverages existing standards such as ISDA’s Common Risk Interchange Format. This has been already deployed by 70 banks and 16 regulators.
Related Links
Keywords: International, Banking, Securities, Basel, Credit Risk, Market Risk, Reporting, Digital Regulatory Reporting, Regtech, Suptech, Common Domain Model, Standardized Approach, Perun, ISDA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
FASB Issues Accounting Standards Update on Derivatives and HedgingRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
