Since the 2008 financial crisis, financial services institutions (FSIs) are facing ever-increasing regulation and reporting requirements. This steep rise in reporting obligations has proven a significant challenge for banks and supervisory authorities alike. Ensuring data quality, coping with redundancies and fostering harmonisation are only a few of the problems that have ensued.

In this article, we will examine the cross-border reporting challenges faced by large FSIs and how these firms can benefit from moving regulatory reporting into a unified IReF reporting framework.

Regulatory reporting challenges large banks face today

Today, large FSIs with multiple entities operating within the European Union (and beyond) are subject to different regulatory requirements in each jurisdiction they operate in. The laws and regulations of their home jurisdiction may also apply to the activities of domestic financial institutions and their clients, customers or counterparties taking place in foreign jurisdictions, in addition to the laws and regulations of the foreign jurisdictions themselves.

Banks must internally maintain solutions for these various jurisdictions that support:

  • individual national data models and heterogeneous dictionaries
  • different transmission frequencies, timelines and levels of aggregation
  • possible duplications and overlaps in reporting, with complex schedules and processes
  • differences in data quality rules (such as validation checks), revision policies, approaches to derogations and data exchange formats

Today, this often means employing multiple regulatory reporting teams with highly skilled regulatory experts, corresponding technical support and multiple vendor solutions. These are complex, costly environments to maintain and manage.

It is crucial to consider the implications of incorporating new regulatory requirements into the existing, usually complex infrastructure and solutions. FSIs should not take a singular approach to new requirements; instead, they should strive to meet them through standardised, repeatable processes.

Granular data reporting and data visualization will become highly important. There will be a clear shift in the required skillset for reporting teams – an affinity with data will become as important as an affinity with regulation.

Regulatory Reporting: New Challenges and Technology Themes, Chartis Research

How will IReF help?

The key driving principles of the IReF initiative are to standardise and harmonise requirements across the EU zone on the national and EU levels in those areas where the impact will not only increase the quality of reported data and corresponding practices, but also enable cost savings and overall efficiency in fulfilling regulatory reporting commitments.

Members of the Euro banking system participated in now concluded cost-benefit assessments to evaluate the following main components of the proposed IReF scope:

  • Standardised data model and dictionary
    A logical data model and data collection that will rely on a standardised implementation model, which will significantly reduce usage of multiple national-based models by incorporating common country-specific requirements that are shared among Eurozone countries into the unified IReF reporting framework
  • Harmonised frequency, timelines and levels of aggregation
    Standardised reporting frequency, reporting timelines and granularity of requirements, including data submission formats and enablement of early submission of selected datasets, such as counterparty reference data
  • Ensuring proportionality
    Harmonised derogations and sampling schemes aimed at ensuring representativeness and proportionality for both smaller and larger FSIs
  • Standardised rules for validation
    A common set of data quality rules, most notably validations and possibly plausibility checks, governed by a revision policy directly applicable to all agents, which should also be adopted for country-specific rules to gain maximum efficiency

In the initial phase, IReF is focusing primarily on ECB statistical datasets relating to banks and will cover the requirements of the ECB regulations on BSI and MIR statistics, SHS-S and AnaCredit for solo entities. The current valid MIR and AnaCredit regulations would be repealed, and the BSI and SHS regulations recast or amended to exclude deposit-taking corporations from the reporting samples. The suggested approach to report solo entities by group will enable further automation and gains in efficiency.

Nonetheless, outside of the core IReF scope, the need for country-specific requirements will persist, particularly when it comes to national legal obligations such as anti-money-laundering measures, government-support initiatives and the maintenance of national credit registers.



Adriana Ellice-Flint

Adriana Ellice-Flint

Product Director Regnology

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