There is no question about the need for EU supervisory reporting, especially in a world where
financial services and their supervision are increasingly data-driven. Nonetheless, a recent assessment suggests that there is scope for simplifying and streamlining EU-level supervisory reporting, helping to reduce the cost and burden of supervisory reporting at EU level for all stakeholders and further improving the quality of data available to the supervisory authorities. Two areas highlighted were:
Data needs and uses
- Given the instances of similar data being reported to different entities, supervisory authorities should review more extensively what data they actually need and already have access to. New data needs will emerge, and ad hoc data requests are needed to fulfill specific supervisory data needs. Similarly, redundant requirements should be dropped, where possible, and data reported elsewhere reused to the extent possible. Central data collection points could facilitate this.
- Given the volume of data provided, the industry expects to know more from supervisors on the purposes and actual use of the data. Better communication on these points could help address complaints that supervisors request data that is ‘nice-to-have’ as opposed to necessary and actually used. This is particularly true in the area of financial stability monitoring. Equally, it is crucial that monitoring techniques regarding market abuse and manipulation remain firmly confidential.
- A review of data use should also keep in mind the principle of proportionality, with the aim of reducing the reporting burden for smaller, less systemically important entities. Though recent initiatives have met the proportionality objective, there is a case for further review where lack of proportionality may be an issue.
- Ad hoc requests for data, though demanding of the reporting entities, are indispensable for the supervisory authorities to request data needed to carry out their duties. However, better coordination between and within authorities, and a stricter screening by supervisors of the need to launch a specific data request could reduce the reporting burden for industry.
- Though much of supervisory reporting is already automated, there is scope for achieving further efficiencies by using new ICT (information and communications technologies) solutions.
- Recent developments in the fields of regtech and suptech are likely to have a significant impact on regulatory compliance and supervisory reporting in the near future. For the moment, EU-level supervisory reporting – and EU financial sector legislation – does not reflect or incorporate these developments. Any strategy on simplifying and streamlining EU supervisory reporting requirements would have to take these developments fully into account.
- Inconsistent definitions and insufficient standardization of formats and processes hinder the development and application of new technologies. A common financial language (‘define once’) and further standardization would address these issues and would also be needed for developing standardized, machine-readable and -executable reporting requirements.
- There is a case for looking further into developing a single hub to which data could be reported, stored, and made available to other EU and national competent authorities. It is one possible technical implementation of the above mentioned ‘report-once’ system, but it could raise a number of other important issues, such as data safety and security and data governance.