20 Oct A Foreign Banking Organization’s FR 2052a Reporting Case Study: From a Murky Blackbox to an Agile Liquidity Risk-Management Ecosystem
The Complex Institution Liquidity Monitoring Report (FR 2052a) requires financial institutions, including Foreign Banking Organizations (FBO) to submit liquidity positions for their total U.S. footprint. FBOs meeting size and business-organization criteria must report promptly after each month’s close.
The Federal Reserve (Fed) uses the report to monitor overall liquidity profiles, risks within different businesses, and compliance with the Liquidity Coverage Ratio (LCR) rule.
Compliance requires significant effort. The requisite data points stem from multiple sources and business functions covering funding, lending, and asset classifications by product, cash/collateral flow amount, and counterparty type segmented by maturity date or date range. Filers must organize the requisite data points into ten tables embedded in one large XML file.
A large European bank with U.S. subsidiaries was using a third-party black-box system that offered no visibility into their data and consequently struggled to meet a looming FR 2052a testing deadline. With time running out, the FBO reached out to AxiomSL for help.
Leveraging its client engagement team’s data and regulatory subject-matter expertise, AxiomSL stepped in. The team assessed the situation, created an ad hoc build, pivoted the client’s existing file, plugged it into AxiomSL’s FR 2052a reporting module on the ControllerView® data integrity and control platform, and successfully produced a valid test XML file that passed the Fed’s quality test on time.
Having surmounted the initial hurdle, the FBO fully implemented the FR 2052a reporting solution working closely with the AxiomSL team. It now benefits from access to increased analytics, audit-trail mapping to the original source, and an overarching view of its liquidity exposure, including a consolidated LCR view.
AxiomSL’s holistic, transparent approach and data-driven platform enabled the FBO to meet its internal risk-analytics needs and regulatory-reporting obligations while reducing its operational costs and meeting deadlines.