About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Opinion – BCBS 239 Compliance: Slip Slidin’ Away?

Subscribe to our newsletter

By Jennifer L. Costley, Ph.D., Principal, Ashokan Advisors

“Slip slidin’ away
Slip slidin’ away
You know the nearer your destination
The more you’re slip slidin’ away…”

– Paul Simon

A couple of weeks ago, the Basel Committee on Banking Supervision (BCBS) issued their second annual progress report on the adoption of the Committee’s Principles for effective risk data aggregation and risk reporting (BCBS 239). Published in 2013, the Principles aim to strengthen risk data aggregation and risk reporting at banks to improve their risk management practices and decision-making processes. The 31 firms designated as global systemically important banks (G-SIBs) are required to implement the Principles in full by 2016.

The report reviews banks’ progress in 2014 and updates a 2013 self-assessment survey completed by G-SIBs, other large banks and their supervisors. The revised survey was shortened from the 2013 version, focusing on the issues considered as “essential and/or critical for compliance purposes” and those where self-reported performance was weak in in 2013.

Even filtered through the objective, analytical writing found throughout the report, the news is not good. The headline: Of the 31 participating banks, 14 reported that they will be unable to fully comply with the Principles by the 2016 deadline, compared with 10 G-SIBs in 2013. BCBS reached several key conclusions based on the survey:

– Overall, there were only minor improvements in average ratings.

– Many banks continue to struggle with the establishment of strong data aggregation governance, architecture and processes and in addition “fail to recognize that governance/infrastructure Principles are important prerequisites for facilitating compliance with other Principles.”

– Many banks actually downgraded their scores in governance (P1), infrastructure (P2) and risk data aggregation (P3-P6), citing factors such as project delays, project complexity, and “scope creep” once the full impact of the regulation was understood.

The report provides details on the results for each of the 11 Principles, including challenges and potential strategies for compliance, well worth reviewing.

It is clear from the document that BCBS is concerned about both the reported slippage against the January 2016 deadline and the significant likelihood that things may get worse: “Regarding the compliance date, the results of the 2014 questionnaire raise some concerns that banks intending to comply by the January 2016 deadline may be overly ambitious… it would appear that a number of firms will find it difficult to fully comply with the Principles by 2016, judging from a review of the work that remains to be done.”

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: End-to-End Lineage for Financial Services: The Missing Link for Both Compliance and AI Readiness

The importance of complete robust end-to-end data lineage in financial services and capital markets cannot be overstated. Without the ability to trace and verify data across its lifecycle, many critical workflows – from trade reconciliation to risk management – cannot be executed effectively. At the top of the list is regulatory compliance. Regulators demand a...

BLOG

Revolutionising the Power of Corporate Actions Data

By Tim Lind, Managing Director of DTCC Data Services. We live in a deeply networked society. Information sharing has moved from primarily one-to-one communication to global networks where data and information is shared instantly and broadly. Across financial services, many organisations continue to advance their communications approach; however, integral corporate actions event data, such as...

EVENT

TradingTech Summit New York

Our TradingTech Summit in New York is aimed at senior-level decision makers in trading technology, electronic execution, trading architecture and offers a day packed with insight from practitioners and from innovative suppliers happy to share their experiences in dealing with the enterprise challenges facing our marketplace.

GUIDE

Valuations – Toward On-Demand Evaluated Pricing

Risk and regulatory imperatives are demanding access to the latest portfolio information, placing new pressures on the pricing and valuation function. And the front office increasingly wants up-to-date valuations of hard-to-price securities. These developments are driving a push toward on-demand evaluated pricing capabilities, with pricing teams seeking to provide access to valuations at higher frequency...