The UK Prudential Regulation Authority (PRA) through its Pillar 2 liquidity framework aims to address risks not fully captured under Pillar 1 requirements (the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR)).
Following the outlining of the Pillar 2 objectives and the launch of subsequent consultation papers (CP 21/16 and CP 13/17), the PRA has published a Policy Statement (PS 2/18) in February 2018 which sets out final rules for a cashflow mismatch risk framework (CFMR).
With the introduction of PRA110, a new liquidity reporting template will be in place from July 2019 replacing the FSA 047 and FSA 048 submissions. Large firms (total assets of €30 billion or above) are expected to submit the PRA110 template weekly with 1 day remittance period while smaller institutions will have to submit the template on a monthly basis with 15 days remittance period.
AxiomSL’s flexible, integrated, data-driven platform delivers an end to end automated solution for Liquidity Risk Management and Regulatory Reporting for financial institutions to meet Pillar 1 and Pillar 2 liquidity requirements while ensuring full transparency and control. Unique in its ability to drill down, automate workflows and review reports to original data sources, our solution empowers clients to successfully monitor risk and eliminate errors that can often occur through manual processes.
AxiomSL’s strategic regulatory reporting platform delivers complete data lineage as well as data enrichment, integrity, traceability and full transparency throughout the entire process with increased efficiency and reduced time to market.
- Control of the entire Liquidity Risk Management process, from data sourcing to reporting, including XBRL submission.
- Fully integrated cashflow engine covering contractual and behavioural cashflows.
- The ability to utilise a Unified Liquidity Data Model covering LCR, NSFR and AMM. Thus, ensuring full reconciliation and elimination of duplicate processes.
- Strategic data-driven solution with complete transparency, drill down and clear audit trail which interfaces with clients’ existing business systems and processes.
- Dynamic dashboards including variance and trend analysis.
- Reduced Total Cost of Ownership (TCO), ongoing maintenance and increased operational efficiency.
Manual Processes – The financial crisis demonstrated that many banks are too reliant on manual processes. Undoubtedly, this reliance causes significant challenges on firms’ ability to effectively respond to the demands of a rapidly changing regulatory environment, creating spider-webs of standalone tools. Additionally, stress testing further increases the requirements on the liquidity systems and processes. A far more robust, automated integrated platform is essential to ensure a flexible and controlled liquidity risk monitoring process.
Data Granularity – Availability and processing of data on most granular levels is an ever-increasing need for all institutions. Modelling on maturity and stability of funding among other factors can no longer be performed on aggregated figures. In order to achieve timely and efficient implementation, firms must ensure underlying technology is fully capable of handling data in its most granular form taking into account BCBS 239 compliance.
Transparency – The current regulatory requirement of intra-day monitoring for liquidity risk requires a leap increase in transparency from previous reporting. Without a system for transparency coupled with stringent timeframes, banks significantly run the risk of creating unreliable and non-reconciling monitoring and reporting systems as well as risk missing the implementation deadlines. This demands a process that offers the capability to easily monitor reconciliation issues across management systems and efficiently trace transactions to their source.
Do not underestimate – With around 112 columns and 260 line items amounting to approximately 29’120 data points, firms cannot afford to take the PRA110 compliance lightly.
Start early – Although the PRA110 is not planned to be introduced until July 2019, it is imperative for firms to start the compliance process early in order to allow sufficient time to assess impact on current systems as well as ensure data quality, granularity and completeness.
Get in touch – Contact our expert team should you have any question surrounding the PRA110 regulation or would like to find out how best to prepare in order to achieve timely and efficient compliance.
PRA110 Solution Diagram
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