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IHS Markit

Reporting requirements mandated by EU regulation are complicated with many types of institutions falling into scope and some institutions falling into the scope of multiple regulations (within the EU and globally), which may impose duplicative and inconsistent requirements. This has led to financial institutions needing to collect huge amounts of extra data and reporting data multiple times in multiple formats. This is expensive and inefficient for both the reporting institutions and those consuming the data, whether they are regulators or, for broader transparency requirements, market participants.

We, therefore, welcome the EBA’s discussion paper (DP) and strongly support the objectives of streamlining reporting, increasing efficiencies and improving the comparability of the data, which should result in a reduction in costs to reporting institutions. The authorities aim should be to reduce the amount of data needed by only requiring data fields if they serve a useful purpose to regulators. Reporting less data, fewer times would allow improved focus on the data required, something that will ultimately lead to better data quality. Consequently, we also strongly support the proposed concept in the DP of ‘define once, report once’.

We also note the EBA’s aim to improve coordination between authorities and that the DP references a number of other initiatives underway in the EU around regulatory reporting (e.g. para 25). This is very important as multiple, uncoordinated initiatives to improve reporting risks further fragmentation. To avoid this, the EBA’s work should be fully integrated into the wider EU work. We would also be concerned if the EBA’s role as a banking authority and the mandate provided by CRR Article 430c limited the scope of the institutions that were being considered by the feasibility study and would therefore argue for as wider scope as possible.

As we explain in our response to Question 1 above, a wide variety of institutions are subject to reporting regulations and financial institutions particularly are often subject to multiple reporting requirements. To these institutions, it is immaterial what the regulatory purpose of reporting data is. The DP speaks about reporting related to prudential, statistical and resolution purposes but financial institutions also need to report under regulation with reporting requirements related to other purposes, including financial stability and market abuse. They may also be subject to reporting data intended for wide consumption such as market transparency (for example, under MIFIR).

If the EU is really to provide an efficient system and meet a ‘define once, report once’ objective, all data sets required by financial service regulation need to be considered together. If this is not within the mandate of the EBA, we would urge this exercise be fully aligned with wider EU work on reporting, particularly the EC fitness check. This does not necessarily means there should be a one size fits all approach for all asset-classes and would like to see a reporting framework that reflects the different characteristics of equities, bonds and derivatives. However, this should still fall under the ‘define once, report once’ approach.

We generally support the issues identified in the DP and strongly support that the ultimate aim should be for there to be a ‘define once, report once’ approach. As we set out in our responses to Questions 1 and 2 above, the EBA’s work should encompass more than just reporting for prudential, statistical and resolution purposes. Firms should only need to report once wherever possible and regulators should be able and empowered to consume the data they need to meet their objectives. Ideally this one-time reporting would also encompass transparency requirements (such as under MIFID/MIFIR), with a relevant subset of the once reported data being made public – rather than there being separate infrastructure and reporting regimes as currently stands.

Financial service firms and markets are often global in nature with EU firms operating outside the EU and third country firms operating on EU markets. Similarly, the concerns of regulators can be global in nature – for example financial stability or the prudential supervision of globally active groups. We, therefore, believe the EBA and EU institutions should, where appropriate, focus for on how standards can be harmonised globally, particularly around critical data elements through initiatives such as CPMI-IOSCO. The EBA and EU are in an excellent position to take the lead in harmonising and standardising reporting requirements, reducing regulatory fragmentation and arbitrage as identified. Furthermore, regulators should consider whether some data could be collected by themselves without directly involving regulated firms. For example, data could be drawn directly from approved persons registers, annual reports or bodies such as the Global Legal Entity Identifier Foundation. The technology to automate these processes would ensure negligible burden on regulators.

In developing and harmonising data requirements, the EBA should be cognisant that if the data required by regulators was better aligned to the data firms produce (or should produce) themselves as part of the running of their firm, then data quality will improve for both regulators and firms. This would lead to better compliance with standards such as BCBS 239 as well as helping firms run more efficiently (for example, accurate data can help with the management of risk, capital allocation and market abuse). It would also reduce the marginal costs of reporting. If these data were useful for firms, they would also likely prove more accurate and useful for regulators. Regulators should also consider whether reporting requirements represent barriers to competition or innovation and act accordingly if they do.

Finally, there is little recognition of the role and value of third-party technology and data providers. Third-party providers are usually specialists who play a key role in improving efficiency, resilience and reducing fragmentation in the market. Such providers can build to the highest standards and help provide regulators with more consistent data while mutualising the cost of compliance among a number of clients. This reduces the overall costs for the industry and lessens the impact of fragmentation, something that can ease the costs of market entry and so aid competition. Such specialist providers also have cross-market experience and, therefore, can better understand the strengths and weakness of the data across whole sectors of the market (compared to the views of individual reporting firms). We do not necessarily agree with statement in para 454 which implies that larger firms are less likely to use third-party providers. IHS Markit’s clients include virtually all the world’s largest banks as well as many smaller institutions.

We would, therefore, urge the EBA to fully involve technology and service providers in their work. This will help the EBA build a better understanding of the trends and challenges in reporting as well as appreciate how technology and innovation could improve reporting capability in the future.
Not relevantSomewhat relevantRelevantHighly relevant
Training / additional staff (skills)X   
IT changesX   
Changes in processesX   
Changes needed in the context of other counterparties / third-party providersX   
Time required to find new solutionsX   
Other (please specify)X   
Highly agreeAgreeSomewhat agreeDon’t agree
Data Dictionary - Semantic levelX   
Data Dictionary - Syntactic levelX   
Data Dictionary - Infrastructure levelX   
Data collection - Semantic levelX   
Data collection - Syntactic levelX   
Data collection - Infrastructure levelX   
Data transformation - Semantic levelX   
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Data transformation - Infrastructure levelX   
Data exploration - Semantic levelX   
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SignificantlyModeratelyLow
Understanding reporting regulationX  
Extracting data from internal systemX  
Processing data (including data reconciliation before reporting)X  
Exchanging data and monitoring regulators’ feedbackX  
Exploring regulatory dataX  
Preparing regulatory disclosure compliance.X  
Other processes of institutionsX  
Highly (1)Medium (2)Low (3)No costs (4)
Collection/compilation of the granular dataX   
Additional aggregate calculations due to feedback loops and anchor valuesX   
Costs of setting up a common set of transformations*X   
Costs of executing the common set of transformations**X   
Costs of maintaining a common set of transformationsX   
IT resourcesX   
Human resourcesX   
Complexity of the regulatory reporting requirementsX   
Data duplicationX   
Other: please specifyX   
Highly (1)Medium (2)Low (3)No benefits (4)
Reducing the number of resubmissionsX   
Less additional national reporting requestsX   
Further cross-country harmonisation and standardisationX   
Level playing field in the application of the requirementsX   
Simplification of the internal reporting processX   
Reduce data duplicationsX   
Complexity of the reporting requirementsX   
Other: please specifyX   
not valuable at allvaluable to a degreevaluablehighly valuable
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Data dictionary – Involvement    
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Granularity – Involvement    
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Architectures – Involvement    
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Governance – Involvement    
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Other – Involvement    
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David Cook
I