2 Abstract: About the presenter: This presentation will provide the attendees with a background and understanding of the UK’s regulatory architecture and key challenges we might face in adopting XBRL.When setting technical standards for Financial Regulatory Reporting the FSA must consider the implications to the UK Financial Services industry and the need to support effective collaboration with other UK and European regulatory bodies. The adoption of new standards must balance the potential benefits with the needs of Financial Institutions to meet their reporting obligations.In 2006 the FSA evaluated XBRL technology as a means to implement Regulatory Reporting but decided in favour of XML and the development of its own proprietary specification. In this presentation I will discuss our latest intentions as influenced by the impending European regulatory initiatives and the UK Government's regulatory reform bill.About the presenter:I am Ayan Kar, the Lead Data Architect for the FSA. It is my role to define the data architecture strategy and the roadmap for the FSA. I hold an Engineering and Business Administration degree and have spent most of my career working on Data Modelling, Data Architecture and Software Development. A large part of my industry background in the last few years has focussed on the Financial Institutions typically implementing regulatory regimes for some of the firms we regulate in the UK.
3 Agenda The FSA’s scope of regulation Data exchange methods The historical background of XBRL in the FSARegulatory reform in the UKPotential benefits
4 1. About the FSA“The Financial Services Authority (FSA) is a non-governmental body with statutory powers given to it by the Financial Services and Markets Act 2000.” (SourceKey characteristics:Independent body that receives all its funding through a levy on the financial services industryAccountable to H.M. Treasury and, through them, ParliamentStatutory objectives: Market confidenceFinancial stabilityConsumer protectionReduction of financial crimeScope includes:Any firm or individual that carries out a regulated financial service market activity in the UK must be authorised by us, unless they are exempt.This includes over entities spanning across major financial organisations, small firms and independent financial advisorsThe regulatory reporting data:Collected using proprietary XML standards and there over 80 data items collected by the FSA as specified in out handbookDefined for the firms depending on its size and permissions granted to it
7 3. Historical background of XBRL in the FSA We decide what data to collect and how to collect it based on the following criteria, these activities span multiple years:Amendment of the Handbook rules through a Legal process, Cost Benefit analysis and Public consultationPolicy driven initiatives like, Integrated Regulatory Reporting, Liquidity, Solvency II and Capital Requirements Directive by the EU200220032004200520062007200820092011201220132010May 2002Sep 2003Mar 2004May 2005Nov 2006Apr 2010Apr 2011Jul 2011June 2012Mar 2013XBRL consultation formally launched through,Consultation on Integrated Regulatory reporting – a new integrated approach1869 CP197 Regulatory reporting (Consultation paper)CBA on XBRL explained key aspects being considered included cost to Firms and maturity of standards,David Kenmir’s speech to Complitech.The FSA embarks on the adoption of Integrated Regulatory Reporting (IRR) based on XML and rolls out GABRIEL (Gathering Better Regulatory Information ELectronically)EBA strongly recommends the use of XBRL for COREP and FINREP (COREP minutes on FSA website)FSA to publish its interim position on adoption of XBRL that is likely to,Explain the scope to be limited to CRD IV & SIIInterim position subject to Reg Reform based changes in 2013New Regulatory Reporting environment for the FSA (DP12) is publishedUse of custom XML re-iterated, however the review notes the increase use of XBRL provided in the IRR update statement.EIOPA announces that it will use XBRL for reporting and asks for feedback to its technical consultation (EIOPA announcement)We explain our intention to use XBRL for MLAR and RMAR returns, mentioned in,PS04/9: Reporting requirements – Feedback on CP197Integrated Reporting update, re-iterates need for XBRL standards.Legal cutover to the new regulatory architecture for UKXBRL statement on use published by the FSA, decides not to adopt XBRL due to,Lack of XBRL experience in UK and hence the reluctance of the firms in adopting XBRL.No other regulatory body had adopted this as a standard and hence the benefit of cross border standardisation was low.(All updates sourced from
8 4. Regulatory reform in UK Financial markets have changed in the ten years since our inception. The Government has decided that in today’s market it is appropriate for the prudential supervision of banks and insurance companies to be carried out separately from work to protect consumers and regulate markets. The Government has therefore decided that the FSA will be divided and its activities split between two new regulators.New revised distribution of firmsThe new Prudential Regulation Authority (PRA), a subsidiary of the Bank of England, will be responsible for ensuring our financial system is stable. It will supervise the ‘safety and soundness’ of around 2,000 firms.The new Financial Conduct Authority (FCA) will focus on getting a fair deal for consumers. It will regulate the conduct – the way a firm behaves and interacts with its customers – of some 27,000 firms, as well as the prudential supervision of around 24,500 firms.
10 5. Potential benefits EU Regulatory Bodies The FSA UK Regulated Firms Consistent TerminologiesReduced risk of misinterpretationRe-use across NSAsThe FSAFaster time to implementation (since EU conducts the CBA)Consistency across industry sectors (specifically for overseas branches operating in UK)Reduced complexity of implementation across sectorsUK Regulated FirmsImplement once and re-use for other NSAsCommon language across geographiesA clear roadmap for changes