The Fundamental Review of the Trading Book (FRTB) has a direct or indirect impact on banks’ data management strategies, according to Accenture and Bloomberg, amongst others.
Consequently, the Financial Conduct Authority (FCA) and the Bank of England (BoE) have outlined proposals for data reforms in the financial sector. Firms are now firmly on notice to embed data for testing regulatory capital requirements.
In publishing its discussion paper Transforming Data Collection from the UK Financial Sector, the BoE seeks to respond to the recommendation for the Bank to develop a new digital data strategy contained in Huw van Steenis’ review of the Future of Finance in June 2019.
The discussion paper outlines the challenges associated with the current system of data collection and investigates potential solutions. Specifically, the paper articulates that whilst “the range and volume of data collected are a vital resource, it is one that is one that is costly for the Bank to collect and firms to supply.” The paper also highlights the relative inflexibility of the current system.
“Our Data Strategy provides a clear path for us to ensure we have the necessary skills and processes in place to remain at the forefront of the changing nature of the firms and markets we regulate,” according to Christopher Woolard, Executive Director of Strategy and Competition at the FCA.
Further, the FCA, BoE and seven regulated firms have jointly published a Viability Assessment report on the latest Digital Regulatory Reporting pilot. The report provides an assessment of the constraints impacting the shift towards more automation in regulatory reporting.
“Having the right data is vital to our role as a regulator, and to the ability of banks and insurers to manage themselves effectively,” said Sam Woods, Deputy Governor for Prudential Regulation and CEO of the Prudential Regulation Authority. “Recent developments in technology should allow us to improve how we collect data from firms.”
Outlining next actions, the FCA and BoE have committed to continue working together to explore common data standards and the legal implications of writing reporting instructions as code.
