Smart technology choices will ease the burden on firms as they negotiate regulatory change

German

June 18, 2015 – By Thierry Haensenberger, Senior Vice President, EMEA, AxiomSL

The Swiss financial industry is going through a period of significant regulatory reform, with a number of important changes being implemented this year. In order to avoid unnecessary cost and complexity, firms need to give careful AxiomSL - Thierry Haensenbergerconsideration to their regulatory reporting technology.

The first important regulatory milestone of 2015 was on 31 March, when firms had to submit their first reports for the Foreign Account Tax Compliance Act (FATCA). This American anti-tax evasion regulation requires firms around the world to report on the offshore accounts of American taxpayers. Having got past the first FATCA reporting hurdle, many firms are now looking to automate the process next time round.

On the domestic front, 2015 sees the introduction by the Swiss National Bank (SNB) of new versions of the templates banks must employ when they use the XML format to submit reports on a wide variety of topics – ranging from balance sheet information to their liquidity and capital requirements. The SNB changes are likely to mean that banks will need to find additional sources of data, ensure the data is accurate and map it into the SNB’s templates.

When not working on FATCA or SNB reporting, there are many other looming regulatory changes for which firms must prepare. These include the introduction of the Common Reporting Standard (which is similar to FATCA, but will involve reporting on offshore accountholders of more than 52 nationalities) and the Net Stable Funding Ratio (a new way for banks to calculate the funding available to them).

The number of regulatory changes on the horizon can easily appear overwhelming. However, the good news is that there is a lot of overlap between the different requirements.

Some firms make the mistake of implementing a new reporting platform to manage each new regulation separately, or they deploy separate reporting platforms in each of the jurisdictions in which they operate. This is very inefficient, as the same data and processes are often needed to comply with multiple regulations in different jurisdictions.

Firms can significantly reduce the cost and complexity of managing the new regulatory requirements by rationalizing their compliance infrastructure. Rather than spending time and money loading and processing the same data multiple times on different platforms, firms should minimize the number of platforms they use – ideally using just one platform to comply with all regulations in multiple jurisdictions.

Firms also need to consider the flexibility offered by their reporting platform. Many firms struggle to adapt because their platform does not allow them to implement regulatory changes without undergoing a complete software update – which is usually time-consuming and costly because it requires input from a team of experts. In today’s fast-paced environment, firms can no longer afford such a cumbersome approach.

What firms need is a software solution that separates their regulatory calculations and report templates from their core platform functionality. This will mean that when a regulator changes its mandatory calculations or templates, a firm can add the new versions to its platform quickly without impacting the rest of its functionality. The firm will only update the core functionality of its platform when it wants to improve its business processes – not because it needs to accommodate a regulatory change. This will involve a software update, but will happen much less frequently than regulatory update releases.

The months ahead are set to be busy for those working within regulatory functions. However, by giving careful consideration to their regulatory reporting infrastructure now, they can greatly reduce the burden on themselves going forward.

This article was originally published by Banking Und Finance.

To discuss this article further, please contact: emea@axiomsl.com

[spacer]