Data Requirements May Place Strains on Bank Infrastructure for Corep Compliance

As the September 30 deadline nears for upgrading the standards used to report data under Common Reporting (Corep) and Financial Reporting (Finrep) guidelines of the European Banking Authority (EBA), many firms will have to replace legacy systems and move away from Excel formats, according to an executive at AxiomSL, a global regulatory reporting, risk and data-management services provider serving  banks and insurers.

Market participants who use legacy systems to report data under the Corep and Finrep standards are going to find it difficult to adjust to the regularly updated taxonomies without embracing change, according to David Attenborough, head of EMEA business development at AxiomSL.

Corep returns are filed quarterly, says Attenborough, and in Extensible Business Reporting Language (XBRL), which allows for more granular, standardized data entry than previous formats. The EBA seems to be updating the XBRL taxonomy every quarter, he adds. The current version is 2.0.1 and, as for September 30 filings, firms will have to submit using version 2.1. From 31 December, they need to migrate to 2.2.

"But [firms] still have to maintain 2.0.1, because if they ever have to resubmit data for those previous two quarters – which happens often – they have to submit it in the structure as and when that data was regulated," says Attenborough.

"Every quarter they seem to be changing the structure... So now banks have to have a data structure from one quarter to the next that is evolving, and still be able to keep the old structure, which is really challenging."

AxiomSL's platform is able to natively manage the taxonomies, says Attenborough, so their clients have access to all iterations of them.

"Before Corep started, which was in March this year, we made a huge investment in our tool, so that it natively managed XBRL," he explains. "We're a traditional regulatory [compliance] platform, but we decided to make this investment because we needed to manage taxonomies natively. We import the taxonomy into Axiom and manage the data structure in the platform itself."

So, are firms ready to report their September data? In the industry in general, banks are "all over the place in terms of readiness," says Attenborough. "A lot of banks went very tactical, with tagging solutions that collected most of the data in Microsoft Excel. Those are the ones that are really going to be hard-pressed to manage this."

Regulators are demanding that data structures be kept in place for seven years, which presents a problem for technology infrastructure at organizations such as investment banks, which are typically designed to deal with current issues, as opposed to historical ones. Satisfying regulatory mandates will involve keeping a number of different systems in place, but the early embrace of XBRL is encouraged.

"If they have gone and embraced XBRL with strong tools, they are much closer to being ready. If they have maintained on traditional platforms – or worse, maintained everything in Excel – they are going to have more [severe] challenges," Attenborough concludes.