Regulatory and Primary Reporting

Regulatory reporting refers to reports provided by intermediaries – according to relevant legal provisions – to supervisory bodies, to comply with specific requirements. It provides information required by authorities to market participants.

There are different types of regulatory reporting, according to intermediary’s category (banks, financial institutions, securities firms, etc.), frequency and granularity required. Intermediaries forward these surveys (or reporting bases) to the national supervisory authority (the Bank of Italy); this process is defined ‘primary reporting’. The process through which the Bank of Italy forwards this information to European Supervisory Authorities (especially, the European Central Bank) is called secondary reporting.

 

From national to European reporting

The evolution of the regulatory structure, from national to European, started in 2011 for banks directly supervised by the ECB and originated various changes.

Before 2011, supervisory reporting was non-harmonised, which means that it was not linked to specific reporting and regulatory requirements/schemes at an EU level.

With the introduction of the notion of harmonisation, regulators started to manage reporting of different nature, trying to keep a certain degree of national autonomy for the single states of the euro area.

The main innovations introduced by the changes are:

• New method to discuss and interact with national and international regulators;
• Harmonisation and introduction of new information requirements;
• Request for an integrated and qualitative data management.

Intermediaries had to adapt to sectorial developments, necessary to respond to a new Community regulatory system in a scenario characterised by companies with extremely diverse internal processes.

The management of multiple and complex regulatory fulfilments required entities involved to perform a great effort from an organisational, structural and economical point of view.

In order to maintain their compliance with the new provisions, institutions had to change their elaboration, management and disclosure processes. The regulatory reporting provided by supervised institutions has evolved to reflect new requirements and to consider new key elements.

 

Transformation of communication process

The Italian regulatory framework tried to maintain, to the greater extent possible, the traditional reporting framework.

The European Lawhas been applied in the field of primary reporting, i.e. intermediaries’ reporting addressed to the Bank of Italy, especially relating to harmonised reporting whose content is regulated by EU rules and non-harmonised reporting, that includes additional control information at a national level.

This evolution required significant changes to the framework and institutions’ data management.

Institutions had to face the impact on decisional processes and operational procedures, while strategic choices had to adjust to the effect of the new rules, in industrial and investment sector.

It has been necessary to integrate some aspects/accounting schemes considering the need of the new reporting standard.

Intermediaries had to partially re-build dedicated processes and infrastructures, for this purpose. Each corporate area has been impacted by changes, implying economic, organisational and management efforts.

The new Community rules did not only pose challenges, but also introduced advantages for supervised entities.

 

Harmonisation advantages

The harmonisation processes outlined many advantages:

• Simplification of reporting system, with the introduction of a single and clear template/scheme;
• Improvement of disclosure, through granular data;
• Increased links between reporting flows and management reports;
• Comparison among information and data comparability;
• Improved soundness of reporting flows;
• Optimisation of risk management processes;
• Increased efficacy of elaboration processes related to data management;
• Improved communication with competent authorities and regulators;
• Disclosure of structured information outlining risk component.

IT investments in response to regulatory development

The transformation of the framework generated significant investments by institutions, to adjust to the regulatory scope of the new rules. The development of IT infrastructure represented a fundamental and decisive step forward, to guarantee corporate compliance. Technology represents the ground of changes, but also of any other process currently needed, to meet regulatory requirements and their ongoing updates.

With TIGREARM suite, Save Consulting developed a set of modules to address any requests by regulators in an exhaustive manner, allowing an ongoing compliance of intermediaries with the changed rules and providing updated reporting.

 

MidaBI module

Powerful, fast and user-friendly: the business intelligence module, managing the data set related to regulatory reporting, allows for an in-depth and cross control of data quality (i.e. an actual data governance), providing users with the following advantages:

• Easy to use and display of any inconsistencies among surveys;
• Positive prociclicality in the identification of differences and their adjustments, and in the achievement of effective management objectives;
• Wide range of reports, both with pre-determined and free formats, by producing indicators, value classes and relevant analysis (data mining) of time mismatches;
• Powerful what-if engine to simulate value classes, aggregates and/or indicators in an extremely simple way.

Like all other TigreArm modules, it is web-based and it can be used also for remote working

 

Pillar 3

The module related to data governance that, starting from the filing of regulatory reporting, allows to produce the reports required by the Third Pillar of Basel.

The undeniable operational advantages allow (usually risk management) to:

• Avoid a de-structured recovery of information from different corporate sources;
• Manage the set of information according to predefined and certified processes under EBA Guidelines and European Regulations;
• Produce a qualitative set of information with limited and simple passages and reduced elaboration time;
• Define the control system, also for regulatory compliance purposes, and information auditability;

Availability of reports (information management) with information that can be navigated backwards, from final data to its basic components.

 Like all other TigreArm modules, it is web-based and it can be used also for remote working

 

PUMA Database

This module manages in a simplified way the wide range of technical disclosure produced by the Bank of Italy, useful for the regulatory reporting process. Specifically, the module allows to:

• Manage the technical/reporting path of information extracted from information systems (fields and input technical forms) until the production of the final reporting bases (output data and items)
• Identify links between original coding (technical forms) and possible output generation
• Document and, where appropriate, check regulatory compliance of generation processes with Bank of Italy regulatory provisions (‘circolari’)
• Export the identified information into an Excel format, for an easier sharing with other users/colleagues.

Technical settings, also based on the management of the new PUMA Database, allow to switch quickly (via hyperlink) from a specific representation to another one, even without technical knowledge (query) or architectural hierarchy structures.