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HSBC’s Johnson Highlights the Deep Data Content Requirements of Solvency II

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Although Solvency II may at first appear to be an insurance only focused regulation, the asset management and asset servicing communities are having to prepare for some fairly onerous deep data requirements coming their way by way of their insurance clients, warned Chris Johnson, head of product management for market data services at HSBC Securities Services, at this month’s FIMA conference in London.

The significant and prescriptive requirements across many types of reference data in support of Solvency II quantitative regulatory reporting and models has resulted in key data content challenges, he explained.

The asset management arms of various insurance firms, and their third party administrators, may have made preparations individually on the subject, but the wider need for consistent data reporting standards needs urgent consideration also compounded by the likelihood that the data requirements of Solvency II are likely to have “strong crossover with other regulations, noted Johnson. Overall, regulatory requirements are increasing across the board and this will “necessitate cross-firm consistency of data, raised quality levels and industrial scale regulatory reporting,” he said.

Looking at Solvency II in particular, monthly, quarterly, and in some cases ad hoc, quantitative reporting template (QRT) reporting requires a consistent data source, including, to an extent, the entity identification data management challenge, he noted. Although work is going on to establish a new legal entity identification (LEI) standard, such a standard is also unlikely to be in place in the required areas before firms need to begin reporting to EIOPA for Solvency II.

Johnson also pointed to the lack of a consistent industry standard instrument classification source, such as a numbering agency, as needed for the Solvency II Complementary Identification Code (CIC), as another key challenge for firms aiming to produce draft regulatory reports during 2012 as preparation to comply with the reporting deadline of January 2014.

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