Currently, regulatory institutions need to submit reports to regulatory authorities on a regular basis in financial regulatory system. However, the reporting process of the existing regulatory report filing system requires a lot of manpower and resources, which seriously affects the quality and efficiency of financial supervision.
Aiming to make the regulatory reporting system more accurate, efficient and consistent, and to help companies better adapt to regulatory changes, the UK Financial Conduct Authority (FCA) launched the Model Driven and Machine Executable Reporting System (hereinafter referred to as “the Reporting System”). This brand new Reporting System applies advanced technologies to upgrade the regulatory system, which is of great help for solving the problems in the current reporting system.
Sunshine Research Center for Financial Innovation, THUIFR recently conducted an exclusive research on the Reporting System, and published the research report on October 10, 2018. The report analyzed the main technologies, advantages and risks of the Reporting System, which shed light on the financial regulation in China.
There are six steps in the operation of the Reporting System as following:
· Defining the range of laws and regulations
· Eliminating the ambiguity in laws and regulations
· Converting the laws and regulations into machine-readable texts
· Integrating the database of laws and regulations with the enterprise database
· Retrieving data from the enterprise database to generate regulatory reports
· Updating the database of laws and regulations before generating the reports if the laws and regulations change
The Reporting System is not just a plan on paper - some enterprises have made some functions happen. For example, in collaboration with FCA, Irish companies Corlytics and Vizor implemented the machine conversion of legal and regulatory texts, and database mapping techniques, respectively.
The Reporting System greatly increases the clarity and efficiency in generating regulatory reports, and enables regulators to revise policy real-time. However, there are also some challenges and risks the Reporting System are facing such as the lack of flexibility and opacity of code. As the latest experiment in the field of regulatory reporting, the Reporting System helpfully indicates science and technology would assist financial supervision, which is of significant reference for tech innovation in China's regulatory reporting, as well as of great help to improve the quality and efficiency of financial supervision in China.
