There may be troubles ahead for the UK Financial Services Authority (FSA) with the impending departure of current CEO Hector Sants in the summer, but, in the meantime, the regulator has pledged to support the data vendor community in adapting to the new regulatory order. To this end, the regulator is strengthening its efforts around its independent software vendor (ISV) discussion group, which aims to provide vendors with a forum in which to air their issues.
“We recognise that ISVs offer a valuable regulatory reporting service and that firms have utilised, and will continue to utilise, their services to assist them in the preparation and submission of their regulatory data,” says the FSA in a recent statement. “We therefore intend to provide support to ISV providers to allow them to update their current software to allow firms to continue to use ISV products to submit data to the FSA.”
The FSA has stated that in addition to the past activities of its group, it will hold even more meetings with vendor representatives to keep them informed of developments and to discuss any issues resulting from those changes. It will also give vendors an opportunity to provide feedback into certain aspects of its online regulatory reporting system for the collection, validation and storage of regulatory data: Gathering Better Regulatory Information Electronically (Gabriel).
The Gabriel system is currently being altered to allow for the reporting of liquidity risk data as part of the FSA’s regime change in the space. Firms must now begin emailing their liquidity systems and controls related data (not including business rules) to the regulator for desk checking purposes. The FSA will then run this data through its XML schema editors to check that it has been formatted correctly and will respond with any alterations needed. Five firms have so far opted to test their systems capability for reporting in this manner and a number of these are working with vendor partners to this end.
Validation checking, including business rules, will begin in March and the FSA hopes to have this completed by the end of April. The same email process will apply and thus far six firms have opted to take part, although other firms can opt in if they wish to, subject to approval by the FSA. The final end to end testing process will then be conducted in May and firms will be required to submit their data to the regulator using a test version of Gabriel at that point.
In order to help vendors and thus their clients adapt to these changes, the FSA has pledged to publish technical specifications for all regulatory data collected by the Gabriel system in a Data Reference Guide (DRG). Furthermore, it will also prepare and distribute a quarterly update, which will highlight recent and upcoming development of the system and changes to data items.
“We also intend to post regular updates on the Gabriel pages of our website to keep ISVs and other interested parties up to date on Gabriel development,” adds the FSA in its statement.
The most recent discussions in November last year included a lengthy Q&A about the data details of the incoming liquidity reports and Elisabeth Bertalanffy-Fournier, of the Wholesale Prudential Policy division of the FSA, elaborated on the deadlines involved. The full discussion slides, including all deadlines and transitional provisions can be accessed here.
The notes for the session, including any questions that followed on from the presentation can be accessed here.
Thus far the vendors that have participated in the discussion group include: AM Best Europe, Altus, Axiom SL Europe, Corepro Solutions, Cornhill Consulting, Delta Financial System, Fidelity Information Services, Financial Architects Limited (FinArch), FRS Global, Fermat International, GKW Computing Services, IBM UK, IntelliFlo, ISI-Dentsu of Europe, Logica, Lombard Risk (formerly STB Systems), Misys International Banking Systems, OLAP Software, QRM, SAS, Spring Programs, Sopra Group, SunGard, thedata and Vizor.
In spite of all this hard work, the future of the regulator has been thrown into serious doubt this month with the resignation of current CEO Hector Sants. Although Sants has not directly attributed his decision to the opposition Conservative party’s plans to disband the regulator and hand power back to the central bank if it comes into power, there has been a lot of speculation about whether this is the case.
Regardless of his motivation, the FSA has been dubbed a “lame duck” regulator as a result of these setbacks and there is some doubt about whether it will be able to push through change without strong leadership. It is not yet clear how all of this will affect the liquidity risk reporting regime on a practical, but it could certainly affect the momentum of the overhaul in the short term.