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
BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks
The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.
OSFI Finalizes on Climate Risk Guideline, Issues Other Updates
The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.
BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending
BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.
HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks
The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.
BCBS Report Examines Impact of Basel III Framework for Banks
The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.
PRA Consults on Prudential Rules for "Simpler-Regime" Firms
Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.
DNB Publishes Multiple Reporting Updates for Banks
DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.
NBB Sets Out Climate Risk Expectations, Issues Reporting Updates
The National Bank of Belgium (NBB) published a communication on climate-related and environmental risks, issued an update on XBRL reporting
EBA Updates Address Securitization Standards and DGS Guidelines
The European Banking Authority (EBA) published the final draft of the regulatory technical standards that set out conditions for assessment of homogeneity of the underlying exposures in simple, transparent, and standardized (STS) securitizations.
FSB Publishes Letter to G20, Sets Out Work Priorities for 2023
The Financial Stability Board (FSB) published a letter intended for the G20 Finance Ministers and Central Bank Governors, highlighting the work that FSB will take forward under the Indian G20 Presidency in 2023
