The REGIS-TR RoundUp
The REGIS-TR RoundUp is a hub for regulatory reporting news and views from your leading Trade Repository team and industry guests from across the globe.
The REGIS-TR RoundUp
S11E4: Bank of England Christmas Special
In this feature-length show, we chat to Will Parry, Senior Manager in the Bank of England’s FMI Analytics Division, which sits in the Bank’s Financial Stability area. We discuss data policy and the Bank’s use of the EMIR TR, SFTR and CCP Supervisory collections, the Bank’s largest structured datasets. With 100 million rows of data coming in per day, we also discuss the challenges and the granular insights now possible in UK markets, and what this means for the Bank, the FCA, and HM Treasury. Plus our usual Christmas messages from past guests and some lively chat about regulation, Arsenal and the age-old question of how to spend Christmas in the office as deadlines loom...
And welcome back to this festive edition of the Registrum Round Up, yes. It is a traditional Christmas show. And Fan of the Christmas has come early to Register Member and the Six Group this year because, yes, we have got a super special guest with us. Will Paneri is joining us from the Bank of England. And uh we will come and introduce Will properly in a moment. And we're all very excited about that. The mince pies are ready to go. The eggnog is on the boil. And uh we'll hopefully be having a virtual drink in the virtual studio to uh see in an early Christmas. But before we get to any of that, I need to introduce uh the virtual studio crew. It's uh wonderful for me to have a full compliment here in the house today, starting in no particular order with the Pride of Spain, uh the head of institutional relations, Laura Rodriguez. Uh Laura, welcome back.
SPEAKER_06:Thank you, Andrew. Andrew, thank you, everyone. Uh yeah, I hope you're doing well. I'm really excited for this last chapter of uh the podcast for this year.
SPEAKER_02:I know, it's exciting, isn't it? Do you have any special Christmas plans?
SPEAKER_06:Uh well, no, actually now. We are visiting uh authorities uh around uh the you know uh different cities. And uh something that I really like is try to go to the Christmas markets in these uh different places. So uh for the moment that's it. For Christmas, no, just family and a lot of food.
SPEAKER_02:That sounds great, actually. And that is uh great thinking, you know, if you're doing a lot of traveling and uh you're working hard, as the whole regulatory reporting industry will be this year. It doesn't have to be Christmas in the office. You can nip out to the local Christmas uh fair and uh pick up some tasty treats to take back when you finally get back home. On that front, talking of tasty treats, uh also joining us in the virtual studio is none other than my most regular co-host, the voice of reason himself, uh, the head of business development, Mr. Nicholas Bruce. Nick, welcome back.
SPEAKER_05:Good to be back, Andrew. Although I'm not sure about you calling me a tasty treat, I've got to say. But anyway, we'll leave that one there.
SPEAKER_02:I think you're a tasty treat uh for people who are interested in regulatory reporting and the technical insight and hands-on practical deployment tips that you give our listeners every month. Also joining us uh with a very sore throat, um, but is uh we can't miss him out at Christmas, and and also because he's the one of us who who looks the most like Father Christmas himself, of course, just with the beard, he's a lot slimmer than me. It is none other than uh Mr. John Kernan, the head of register in the UK. John, a very uh croaky welcome back, but thanks for making it.
SPEAKER_04:Hi, Andrew, hi everyone, thank you. Great to be back.
SPEAKER_02:Have you got any Christmas plans? Are you going to be uh coming over?
SPEAKER_04:Um, not for Christmas. Likely I will be it be in Dorset for the new year.
SPEAKER_02:Excellent, good, back in Dorset. My old stomping grounds as well. That'd be nice. Uh Nick, I meant to ask you, have you got any Christmas plans?
SPEAKER_05:To be honest, just looking forward to some time with the family. Sons back from university, um and you know, listening to John, I'm just thinking maybe just kick back, put on some Barry Wyatt, and just take it easy and enjoy the festive season.
SPEAKER_02:You know, everyone has got the right idea. I like this. These all sound like Christmases I can get behind. But before we get to any of that, we do need to get on with this week's show. And like I said, it's a very special show. We're joined by Will Parry, senior manager from the Bank of England's FMI Analytics Division. Will, welcome to the show.
SPEAKER_03:Hi Andrew, very nice to be here.
SPEAKER_02:Now, anyone who has been to the many, many events where Will has been representing uh our central bank here in the UK, um, you will uh know Will. But if you don't, uh Will is a senior manager, as I said, on the uh FMI Analytics Division within the Bank of England that sits in the bank's financial stability area. Will is responsible for the policy and bank's use of the Amir Trade Repository, the uh SFTR, and the CCP Supervisory Collections of Data, um, the bank's biggest structured big data assets there. So Will is the man to talk to you about data quality and all of that. Prior to that, of course, he joined the bank in 2000 after completing an engineering degree. He's worked in a variety of roles uh within the bank from the front, middle, and back offices, closely involved in the bank's sterling operations during the great financial crisis and uh the bank's initial response, of course, to COVID. Uh so he's been at the heart of QE and the heart of uh stabilizing the financial system across Europe. So he he has got all the answers. Will also previously established and ran the administration of the Sonya benchmark, contributing to the bank's work on the transition to risk-free reference rates. And and very impressively, Will was also a primary school governor uh very early on uh at one point as well. Finally, someone who's qualified to keep the virtual studio crew in check. Uh, because uh trust me, they're like a room full of six-year-olds at times. So, Will, a huge welcome to you from us to the Bank of England. I want to get to the big question straight off. Data quality and usage. This is really the big theme that market participants always want to discuss. What are national competent authorities, regulators, uh central banks doing with the data? And of course, back when we started out, uh just before SFTR launched back in 2020, um, there were many questions about is there too much data? Can the regulator handle it? You know, do they have the systems and processes in place? Those days are long gone. We've had years of bedding in with data now. So uh I want to ask you, how does the Bank of England use trade and transaction data now across its committees, and why is data such a strategic priority?
SPEAKER_03:Thank you, Andrew. Um so as you know, the original driver for the big transaction reporting collections was the global financial crisis in 2008-2009. And what was clear from that episode was the lack of visibility the authorities had on what was going on in those key financial markets, the interconnections to firms. And and and so it's basically that gap that the TR uh data collections are designed to fill. So in the UK, uh EMIR and SFTR. And whilst that's the starting point was to support financial stability, today, um, as you alluded to, we use the data in the bank across institutions as a bank wide resource. All four of those, and it's one of the few data sets where that does happen. So the Monetary Policy Committee, so that's the committee which is responsible for keeping inflation in line with the two percent target, making decisions again about bank rate. The Financial Policy Committee, uh, which aims to protect and enhance the resilience of the UK financial system. The Prudential Regulatory Committee, which is responsible for supervision of UK banks, building societies, credit unions, insurers, and major investment firms. And then the newest of the statutory committees, the Financial Market Infrastructure Committee, which is responsible for the supervision of central counterparties, central security depositaries, and payment firms.
SPEAKER_02:I imagine there's like the the uh uh FMI, the financial market infrastructure directorate there, you've got like a big sort of dashboard with flashing lights and red phones and what have you. I'm I'm thinking a little bit like the Batcave just uh with uh civil servants, but tell us tell us. Sorry, that's my fantasy. Um what do you actually use the data for? And and what what what's a typical usage like?
SPEAKER_03:Fewer red phones than you imagine. I will confirm that bit. So I'm just thinking about some of the analysis that we do. So analysis of interest rate, inflation, market positioning, and expectations that feeds into the briefings there of the NPC deliberations, kind of what does the market think is going to happen. Uh the emir data provides the quantitative evidence base when proposed changes to the scope of derivatives clearing obligation are being uh considered. It's basically it's it's all about evidence-based policymaking. So it's also about informing the market. So uh as part of the Solvency II regulation, the PRA publishes a deep, liquid and transparent assessment of interest rate markets. EMIR data is the underlying source to that, that's the evidence base. But think about the financial stability side, um, the data has been used to inform policy thinking on the flow of liquidity around markets. One thing we've been exploring is to what extent we can do kind of a desktop stress test using the reported data, do a complete revaluation of positions. So, for example, thinking back to April and uh post-Diberation Day uh events there in markets, can we estimate what further impact in a given market will have on variation margin calls? It's to understand the potential challenges in funding markets, to inform policy choices. And maybe one final example. In responses to requests from uh the Treasury as the authority in charge of financial sector sanctions, we have on occasion analysed the data to understand the potential prudential and systemic impacts of sanctions being considered. Any concerns identified have then been passed back to feed into HMT's decision-making process. So it's kind of it's it's it's very much the uh evidence base that that we use the data across the institution.
SPEAKER_02:Of course, you have a huge volume of data coming in. That data is precise and granular, but you you've got to crunch all of that and actually, you know, use it at a fairly macro level. So, I mean, how do you manage that sort of trade-off between uh you know deep granularity on the one hand, but then an accessible, usable, sort of agile tool on the other for those sorts of supervisory functions you just described?
SPEAKER_03:So the email data is the largest structured data set in the bank. We receive around 100 million rows of data each day from the four UKTRs across the state and activity files, the stock and the flow of positions. This is really big data. And as some people have said, big data is for machines, small data is for people. So how do we go about doing that? So we've invested a lot of time in preparing the data and onboarding the latest analytical tools that enable users in the bank to make use of this data in a highly efficient way. Every day before the data reaches analysts, it gets enriched and transformed into an index structure that is stored in a distributed fashion via a Hadoop ecosystem on the bank's data platform. Data users can then interact with the data using big data tools like Spark and Hive, as well as the more familiar coding languages R and Python. Beyond that, part of my team's work is to provide analytical tools to those in the bank to narrow down the big data into small data as quickly as possible, to democratize access to data in the bank. And we aim to make it straightforward for users of the data to choose the appropriate granularity for the job they have to have. So taking the example I said earlier about desktop stress testing, using reported data. Granularity there is really key. To do a re-evaluation of positions, we need to know what the day count convention is being used in that scenario. A different piece of analysis will require a different piece of granularity.
SPEAKER_02:I want to bring Laura in here. From your side, you speak to um uh institutions, you also speak to reporting firms. Um how does this align with their view of the the data they have to uh report into uh TRs?
SPEAKER_06:Actually, uh Andrew, uh this view from Willis is very interesting because because we can see how it fits with uh the the requests that the um entities receive, for example. I think we are seeing that firms are paying much more closer attention to the details behind the reporting errors that they have. And a big driver of this uh is the the periodic sharing that they have from the NCAs on data quality indicators. So these indicators uh highlight the potential issues that uh the NCA sees. And when um something is flagged, then uh the authorities they often follow up with the films for more information. And what is interesting is that uh as data become more accurate, these indicators also become more sophisticated. Um so authorities are raising the bar, as as we can see, and and firms are responding uh on that perspective. Um I believe that most firms don't want to wait for you know their NCA to come to their door and and present the errors that they have found. I think they prefer rather to identify and fix the issues themselves in advance, so being more proactive to that. And and this shift towards the the proactive uh uh use of the data, uh it's been a really positive uh um uh development or or a trend that we have seen uh recently.
SPEAKER_05:If you look at the discussions we have with clients, I think you've seen a real evolution. And certainly if you look at AMIR reporting after Refit, I think a lot of the initial focus was obviously just around just ensuring that you could report to the new standard. But that very, very quickly flipped once we saw kind of reporting levels normal normalize in terms of rejections, etc., to firms really focusing then on the data because the engagement that they're seeing from, you know, whether it's the regulators, from their NCAs, et cetera, has increased. There's more transparency out there, um, certainly as well around the indicators that the regulators are looking at. And so clients now really want to understand their data. Um, the good thing is that flips to us as well. So they're challenging us. So they they want to understand their reconciliation stats, they want to know where they benchmark. So, you know, they want to be able to demonstrate that they are proactively monitoring what's being reported and that they're on top of it. And they're if there are any errors that they're correcting it, they're addressing it, and they're working with their counterparties to ensure that really that the data they're reporting is of the best standard and the best, highest quality. And that we've got to remember there's when it comes to things like reconciliation as well within AMEA, we've got phase two next year, which is gonna be a huge undertaking. And what we keep saying to clients now, and certainly here across the industry, is you know, you need to ensure that your data is correct now. You know, that's the best way to manage this kind of evolution that we're going through. So it really is, it's just the central focus.
SPEAKER_02:Well, on that front, Will, I want to come to you and ask a bit more about Refit because it's been live now for some time. It's bedded in uh clients have been through the the the huge disruptions of last year, and now we're we're hearing that you know everyone is sort of settling down with the mirror. And actually the the mood in the uh market seems to be that they'd like a bit of a break from regulatory change for a bit so they can get their systems bedded in and running and do some business as usual. What are the lessons that have emerged from your side about uh data consistency and reporting accuracy? Uh that's presumably getting better all the time with the data that you receive.
SPEAKER_03:The vast majority of firms worked really hard to meet the two deadlines for refit. So day one reporting of new trades in the new regime, and then end March this year uplifting all those historic trades. And the bank and FCA had continuous reporting throughout. We received the data seamlessly throughout the that whole period of the transition, meaning we could use the data for our ongoing analysis and systemic risk monitoring. It's why we have the data. So really there's a really big thank you from the authorities to everyone for that. Now, as the FCA put out in their Market Watch 84, the implementation wasn't perfect across the board, and whereas regulators have been following up where necessary. And as a brief start on institutional niceties, um, the bank is responsible for the requirements of supervision of your MER reporting regime for CCPs, the FCA for all other reports and the trade repositories in the UK. So we do work very close together, I'm sure we'll come on to. But thinking about the refit changes, so first of all, by requiring data to be submitted in the XML format, that has immediately improved the consistency of how the data are reported to the authorities. In turn, that makes it easier for us to analyze the data. And part of the consequence of that is that we in the FCA are improving our ability to understate data quality checks. So while the XML ensures the data reported are valid, our checking, but what we're trying to do is to establish if they are plausible. Validation and plausibility, they're not uh fighting each other. They're actually just part of the continuum. Valid basically means it's in the right format, it's in the right place. Plausibility is basically that maturity date is after the start date. You don't get that from a validation rule. You know it's in the right form, you know it's in the DD, M MYY, or whatever the format is, but actually make sure they're the right way around. It's a simple example, but it kind of illustrates the point that both could be valid, but it's implausible if basically it matured two days before it actually started. What we want to make sure is that a lot a lot of say XMUs and a lot of the the heavy lifting, just by its structure, are on that validation. So most of the stuff that comes through to us via the trade repositories is valid. What we're doing is basically make sure actually kind of is that plausible? And it's looking at kind of both sides of the trades where it's where we have those two sides. It's entirely plausible for a big investment firm to do a trade of a billion pounds. Is it plausible for a small corporate to do a trade of a billion pounds? Probably not. And so it's looking at those kind of things. So actually the data, how we actually use the data, we actually get the right things.
SPEAKER_02:Basically, you are double checking the fat-fingered typo issue, which has caused uh many a financial crisis back in the 1990s and the 2000s and the early days of digitalization.
SPEAKER_03:So there are the fat fingers that we do see those, but sometimes it's just the way things have been interpreted or coded. Um we've seen things where someone's been in a percentage as a hundred rather than one, or or however it is. I mean, uh as I talked about at the start, uh one of the things that I want everyone to take away from is that we do use these data, these data are actively used. But and say that data doesn't gather uh dust on the metaphorical shelf. But actually the flip the second part of that is the fact we use the data means that data quality really matters. It's not an academic exercise, it's not a just a stick there for regulators to beat up beat firms up. Data quality affects how we interpret the data, how confident we can be in the conclusions that we draw. And ultimately it's those sorts of things which impact the policy choices being made off the back of the data by the UK authorities. So data quality is the means to the end of good policy making. So it's another example of kind of the f the ways we use the data. Um my team will build tools for to address specific scenarios. So an example is our suite of ex what we call the exposure tools, or more descriptively, who's exposed to firm X. So these tools mean that within a few minutes, users in the bank can see in which markets a given firm is active in, who its main compil who its main counterparties are. So think Silicon Valley Bank back in March 2023. PRA supervisors use this to understand the potential risks to the firms they supervise, be that direct trading exposures or via CDS, to inform their supervisory engagement. Financial stability wing of the bank use the tools to assess the potential systemic impact of a possible failure. Market colleagues know where to focus their market intelligence gathering. When time is of the essence in this sort of scenario where there's we hear rumors or have knowledge of things going potentially going wrong, being able to narrow down where issues might emerge is really paramount. And that goes back to how we've been working with the data to speed up how we can do that analysis. What took a week several years ago, we got down to several hours, we've now got down to minutes.
SPEAKER_02:So tell us about the UK, uh, how its regulatory frameworks are evolving and integrating with the rest of the world. Because there's been changes everywhere over the last year, uh last couple of years. Um there's been changes in Japan, in Australia, we've had sort of similarities to Amir taking place in other places. Obviously, it's mandatory clearing of US Treasuries, uh, there's uh changes afoot there. There's changes in the EU with the Capital Markets Union, plans like that coming. It it seems that you know everywhere has got more regulations coming faster than ever before. Where does the UK fit in that picture? How do does something as international as the City of London, you know, maintain uh its regulatory sort of relevance as the rest of the world is changing so fast as well?
SPEAKER_03:Markets evolve and we want our reporting requirements to evolve with them. There's no point of basically kind of getting data reported on yes on the trades of from a decade ago if those aren't being done, and new things are. But we also recognise that there are costs of making changes to the collections. Data reporting requires industrial processes for reporters, for the TRs, and for us as the authorities. Thinking of the changes to reporting over the last couple of years, one of the objectives of the 2020 core refit changes was to align the UK regime with CPMI IOSCO technical guidance. So we see that international alignment where appropriate. And that's helping ensure a more globally consistent data set. And thinking about kind of where we are. Um the UK collections have many similarities to the EU regime, but that should be expected. Immediately post-Brexit, the regimes were near identical. Through our respective rePIT initiatives, we're aiming to solve the same issues around data quality. So it shouldn't be surprising that given the same starting point, we largely ended up in a similar place. But not the same. We chose to diverge where it made sense from the UK market structure perspective. And we're aware of changes being talked about, um, the ESMA's call for evidence uh earlier this year. This is a topic we in the FCA had already been considering, looking at it through two lenses, kind of how to reduce unnecessary duplication in transaction and post-trade reporting, ensuring all requirements are proportionate to the benefit, while still maintaining our ability to gain actionable insights on the data necessary to help achieve our statutory objectives.
SPEAKER_06:I believe um simplification needs to come uh still with confidence from the authorities that they are still able to uh perform their supervisory activities without any problem. And and we have seen how important uh and we are seeing here how important is for the authorities having a um clear uh quality of the data. This is something that should come first. Um and uh they should uh uh discuss and see how they are doing it abroad uh with uh simplification, but that they can still have a quality in the data and and look into this. So uh definitely uh it's something that uh we will see more and more, even if uh divergence for sure it could be still there, depending on on the the regime and and the framework in general, but um for sure a lot of collaboration and not only between authorities but also uh with uh with the industry.
SPEAKER_05:So I find this really interesting because I think simplification is you know just generally is welcomed by everyone when we talk about we talk about it. But I think as well, and it's really interesting when you hear Will speak, and I think people have to remember that you know regulators have built up these frameworks for their own uses and their own purposes. So if you had a blank piece of paper, I think globally when you speak to clients, you know, they'd want to report you know, simplification, yes. So I guess the bare minimum that is required, um, and they would want that to be reported consistently across every jurisdiction. But we don't have a blank piece of paper, and you know, every regulator will have their own purposes, their own requirements. And I think when it comes to simplification, it's great because we're seeing a lot of engagement on our side from the regulators. Um, but even when I speak to clients, it's it's kind of horses for courses now, because for every client, simplification doesn't necessarily equal simplification now because it's not a blank piece of paper. So simplification doesn't necessarily mean it's a cost reduction because the investment's already been made, the systems are there, and any kind of change has an impact. So I think this is going to fuel our podcast for you know for quite a period going forward, because I think what we're looking at now is how can we keep that alignment as much as we can across markets, but equally, you know, where we can change and we where we can simplify, how can we do that where it makes sense, but it really does also reduce the burden on clients or on you know market participants, because otherwise it's not achieving those goals. So I mean that you know there's a there's a lot of things there that are we're gonna be looking at and we're gonna be discussing um over the coming sort of not just months but years, because we've already gone through a huge headwind of regulatory change, you know, and I think a lot of this stuff isn't necessarily in the near term, but it's certainly there on the horizon.
SPEAKER_02:And and well, it it seems like it's very much evolution, not revolution, when it comes to the way uh different regulatory authorities interact. The the UK was always outside the Eurozone. It's had got a very permeable relationship with uh many different markets in Europe, many market participants, and of course TRs, you know, operate in both jurisdictions. So uh I'm I'm guessing it it's not been a huge change post-Brexit. We never like to mention the B-word anymore. John was our our Brexit reporter, and he's actually lost his voice uh for this show. That's how much he didn't want to do it. I think it's psychosomatic. So so tell us, um, you still uh presumably have regular contact and cooperation with regulatory authorities within the EU.
SPEAKER_03:Yes. So um basically of central banks and financial authorities globally, um both on how we make use of the data in their institutions and actually on occasional specific topics to what we're seeing in the data. And as you say, from a UK perspective, uh it's e I say it's evolution, not revolution. Um everyone has basically made huge, huge investments. If you started with blank piece paper, would you do things differently? Yes, very possibly. Are we starting with that blank piece paper? No. As as Nick says, we've kind of people have done that investment. We've done the investment on our side. Um we've invested on our capabilities to actually receive all these data. So yeah, we we um I keep in contact with uh colleagues acros uh across the various institutions, uh say in Europe and also globally.
SPEAKER_02:The hot topic is dual uh versus single-sided reporting. This is uh an active debate. There are benefits and disadvantages with both. We we know that. Um I mean, how do you view those models? Not necessarily how the Bank of England views it, but as a data expert and someone who's hands-on and up to your elbows in the oily bits of reporting on a daily basis, uh where do you sort of think that is going to go?
SPEAKER_03:We recognise that industry's views that dual-side reporting is burdensome, but as receivers of the data, I'll know that we actually get a lot of value from a data quality perspective from it, the matching and pairing process to validate the quality of the data submitted. While firms may be doing this as part of the reconciliation process, we also use it to identify data quality issues on our side. It's by looking at comparing A and B. Are these the same things? Is that uncovering issues? Yes, it is. It also needs to recognise that the UK is a very over market, as you said, is not simply that every transaction done by a current UK reporter is done with another UK reporter. So a switch to single-side reporting might not be the panacea that some might think it could be. If we go to one-sided, you could think about the logic to determine who is the reporting counterparty for a single-sided regime can be complicated and introduce under reporting. And we've seen that in other jurisdictions. And we've been looking sort of at investing in our uh the bank and the FCA to actually investigate these systematically. But I say we also have us of the data in the bank, just die as they dive into the data, they can uncover data quality issues which they flagged to my team. And we looked for we looked for having identified those kind of unusual or unexpected values, we work closely with the FCA sharing our findings. The relevant authority will then reach out to the firms to understand better what's been reported. Just because it's unusual doesn't mean it's wrong. And if the firm is contacted by the FCA about a data quality issue, that could have been first identified by the bank and vice versa. And so what we what we're trying to do is that if we establish that there is a data quality issue, uh the firm will be asked to fix it and create the historical reporting. It's it's about getting things fixed at source. So actually, through all that proactive work and stuff that Nick talked about earlier about firms are doing, data quality is improving. But we'd also encourage firms to tell us where they identify issues through the areas of emissions forms that we have on our websites, CCP's reporting to the bank, all other reporters to the FCA. Going back to your original question, jewel style reporting is a really powerful tool for data quality.
SPEAKER_02:Nick, you're the guy with your finger on the pulse when it comes to many different partnerships and kinds of vendor and uh management company that relate to registry. I mean, what are the implications on the reporting debate when it comes to delegated reporting, vendor-supported reporting? Uh I mean, that there's got to be a a level of complexity that comes from that as well.
SPEAKER_05:I always think with this, people sometimes forget the journey. Um, and what I mean by that is that the market, if you ask the market, the market would say, look, let's move to single-sided because it's easier, and I think everyone recognises that. But the reality is as well, when I speak to clients, you know, and you say, Well, uh okay, but single-sided, is it because that's the biggest cost reduction, or is it the constant change? And I think a lot of times it's well, it's the constant change and how much we have to reconcile. So they want to focus on well, actually, if you just reduce that to fewer number of fields, the ones that are considered the most material, that would ease the burden. But I also think people can understand the journey. The reason that we had Refit and we increased the amount of data that needed to be reported, the reason that we've actually increased the number of reconcilable fields, and as I said, there's still a phase two to go through, is because the data quality wasn't there originally. And this has been needed to actually drive and improve the data quality. And as Will's just said, how important that data is. And I think people sometimes forget the journey, is unfortunately, it's been necessary to get the quality to where it needs to be and to ensure and to be able to monitor that it is where it, you know, it is at the right level. And I, you know, I kind of get the the two the two kind of the two kind of themes is it's it's like everything, it's a balancing act. And it it's you know, and it's a real challenge to how do we get to that right level. And ultimately, I guess you've got to be confident the data quality is at that level and can be maintained to that level before then really you can step back and say, Okay, well now where can we take it to?
SPEAKER_03:And So we recognise that. But and we we're always trying to get the right balance that we can actually get the insights we get from the we need to get from the data and have confidence in that data.
SPEAKER_02:Yeah, I guess anyone who's got a teenager will say uh will will know that this is a sort of six-seven situation here. We're all making the that hand gesture as we as we say it, because it is a balancing act. Uh Laura, uh for you, um what are you uh hearing about this debate? The challenge is because you speak to firms, you speak to regulators, uh where is that tide flowing on the reporting, dual or single?
SPEAKER_06:Well, in general, I think it's it's very interesting because uh although you know um we have this uh we try to have this balance at the same time, entities they want to do ask um the best possible way. And uh one of the things that uh they are looking on is to close most of the gaps that they might have um uh on the quality of the their data. Um and one example would be um the update of legacy data. Uh for example, there are some legacy data that cannot be updated because they have a special character and they do not uh they are not supported by validation, uh by the validation rules. This data in particular is not even uh um provided to the authorities because it does not fit the schema and the schema. But the data is there and they know it's a problem and they want to fix it. So um they are raising this to us, so for us to raise it to the authority and try to find a solution. So it's uh um, you know, it's it's clear that they want to solve all this uh gap on the quality of the data, uh, even if it's a Biden also on their side, because they they just want to have it in the right way possible.
SPEAKER_02:Okay, good. So we come now to uh the the the million dollar question technical standards. What's the current status of amendments to the UK technical standards and the related testing programs? I mean, that must be quite a difficult thing to manage. Uh the technology is always moving on, and the opportunities to fine-tune and improve uh uh are always uh appearing. So, I mean, how do you keep control of technical standards and testing?
SPEAKER_03:So in early August, alongside the FCA, we published changes to the requirement. Uh which confirmed addition of execution agent field to margin tables. That change will go live on the 26th of January 2026. But as Nick said, we're we're aware that basically kind of industry w w want stability. But actually it's worth reiterating that this particular change is something that was uh asked for by industry. Um I co-chair with the FCA, the UK Emirate Reporting Industry Engagement Group. This is something we set up in late 2023 uh to basically support the implementation of Refit to make sure we have that dialogue with industry about not what the requirements are, but actually how we're going to implement what those requirements. And so this particular change about the execution agent field, this was something that I got flagged in summer 2024. And we had a discussion with industry at that point, we decided we're not going to try and make through the change quickly. Let's go live as where we are and let's fix it when we can. Now, uh the engagement group in general finds a really helpful tool for the authorities to actually hear what are the issues, the the real practical issues, to make sure we have that understanding of kind of what we're asking to be done, to make sure things are done consistently. And this is one of the things that a lot of requirements that the authorities put out. We set the outcome we want to see, and then basically leave industry to agree, work out for themselves how to achieve it. The reporting is actually quite different. We want everyone to exactly the same way, so we can get that consistency of reporting, so we can actually make those it make the interpretations of the data correctly. So that's why having the engagement group has been really helpful, and while we've now got um up to 90 uh QA on our on our websites. It takes a while to go through the governance. When we go through when we go through and make these changes, it's not something that we can say, oh yeah, that's a good idea, let's go and do it. We have a process that we've got to go through. Um so we have the formal consultation, we've had those discussions with industry beforehand for the engagement group and a fruit of a forum. We have the formal consultation, we don't have to go through our governance within the bank, within the SCA before we can make those changes. And then make sure that we give industry the right amount of time to actually implement those changes.
SPEAKER_02:Are there lessons that you've learned? It's al it's always a question that comes up is uh sometimes market participants are scratching their heads thinking surely the regulator knows this is a massive burden and we're really stressed and we're busy and you know we haven't got time to pursue all these things. Um I mean, have has the experience of refit changed your outlook on uh the the the pace of change and how fast technical uh changes the specifications evolve? Uh have you learned some sort of best practice from that to get uh a better result from the industry?
SPEAKER_03:We've not so much learned and reinforced things we knew already. That with with these in industrial data collections that uh uh like a mere, it's a huge lift on our side as well. It's not it's not going to be sitting in a library tower and weak fingers and RIT work straight away. We face the same challenges internally that that y you will have as well. But we've got to make those changes to make sure we can receive all this data. 100 millirays of data a day, this is a lot of data. There's only so much change we can actually do ourselves. And that's I suppose an interesting part of my role that I see it from the policy all the way through to the usage. In my particular role, I've got that end-to-end view of it. It's not kind of what I sit in the party bit, then somebody else has got to make it happen elsewhere. So as you think about these changes, it's kind of we want to make we we we hear what industry said about keeping it stable, as Nick Nick said. This particular change we're putting through now, that was in response to industry feedback. That was that was not as saying, oh, here's something we hadn't thought of before. Ultimately, why do we have these data collections? It's so the authorities can have that visibility of what's going on in markets so it can inform our policy. But we recognise that costs to industry and it's it's always that balance between the two.
SPEAKER_05:I think you know, what Will said, it's more about demonstrating the lessons that have been learned over a longer period. I think as we've seen regulatory reporting evolve um from the financial crisis, what you've actually seen, these sort of refit is much bigger windows being given to the market for the development. So getting things like the you know, the draft um schemas in advance, having 18 months to build to the requirements, all of this, we've seen these positive steps. We've seen more engagement across the wider community with the TRs, with the associations, with market participants. And I think we've seen that. And you know, even with the changes that are coming up, again, that's a reflection of you know the FCA and the Bank of England actually reacting to a market-driven change. So for us, we don't even see this as a you know, as a particularly big impact to the market because actually it's something that they want. So for us, this is about just ensuring that we've updated the schemas, we've got the test environments available. But the market actually wants this, it's prepared for this. So it's actually it causes, I would say, very little to no disruption. You know, we're talking here actually optional fields as well. So actually the impact to this is quite minimal, which is, you know, which is great. That's what you want to see as well.
SPEAKER_03:I find it really powerful, the the Amira engagement group, to have that discussion to actually understand what are the challenges, what are the things that we can help. Can we add clarity which will help industry to help us?
SPEAKER_02:And I mean Will. Is reporting done? Are we done now? Is it it's it's all there, it's fixed, and uh now it's just you know making sure the engine keeps running? Or are there the data friction points that still need solving?
SPEAKER_03:It's like the old four-throw bridge. It's kind of you you you you get to one end and you start again. Suddenly that analogy now breaks down because they've got some new paint which lasts a lot longer. But as I said earlier, markets evolve. We may need to sort of make sure we're actually capturing those markets correctly. Um that's not a crystal ball, it's just a statement of innovation in the markets, and we need to make sure we keep up with innovation, recognizing the cost for industry of any change.
SPEAKER_02:Okay, and Nick, I mean from your side, that market participants are always uh asking for a slowdown in the pace of change and reporting. But are we getting to that stage now where it's i i it's painting the fourth road bridge, but the pain's advanced, so it's it's slowing down a bit?
SPEAKER_05:Yeah, I'd love to tell you everything's perfect. I don't think we we don't live in a perfect world, we know that. Um so maybe a little bit of a call to arms. I mean, even when you look at the data, if I look at a very kind of high level and I'm quickly getting my notes in front of me, because it's something that I've talked about quite a bit recently as well, is you know, when we look at our universe, probably only about 57% of that universe is eligible to reconcile. Um and then if you then look at that, 85% of that you know, reconcilable universe reconciles internally with us. So that tells you when we then look at numbers and we go, look, pairing rates are at 96%, we've got matching at around 81%, that all sounds fantastic, but the reality is when I then strip back and I look at the inter TR, the rates are still not where they should be. So we still see problems there. So, you know, our internal matching rate, for example, is 92%. So it's dragged down to 81% because of the issues we see across the intertr. And it maybe comes back a little bit to what Will was saying and also to what Laura said in terms of well, our clients are sitting back, are they looking at the key fields? Uh, you know, what's material, making sure that they've addressed that. But we still see things, and these are problems that you know we saw previously. So things like eligibility to report, you know, unknown versus blank causes a mismatch. Maybe on monetary amount, you've got a percentage versus a value. So what really for me the call to arms is now firms are looking at that data, is just to look where those mismatches are, look at where they're getting the highest percentage, and actually speak with their counterparties and look to address this, look to align on these kind of things. And that will dramatically improve um the rates that we're seeing. So a little bit of a call to arms from my side, because there's work to be done, and as we keep mentioning, there is a phase two coming. So let's get everything correct now, let's be ready for the phase two when it comes in. So that is less of an impact.
SPEAKER_02:As we hear the sounds of Christmas jazz rising in the background, it's time uh for us to bring the show to a close, but we still have time for our uh crystal ball question and a few Christmas messages from uh some of our many guests over the course of the last year. So do stay tuned for that. But before we go, Will, I want to ask you, how do you see 2026 shaking out for the industry? What do you think are going to be the the big challenges uh that needs uh maximum attention in 2026?
SPEAKER_03:As you said, is we've got right at the start of the year, we've got to change the uh the schema as we implement the uh um the addition of the execution agent field to the margin table, so that's at the start to make sure that goes smoothly. Then it's uh as uh Nick's talked about, and you've mentioned the reconciliation uh coming in September, that will be soon upon us. Yes, it's kind of having nine months away at the moment, by the time that will creep up on us. And from the authority side, it's gonna be we're gonna keep investing and making sure we actually get them extract the most out of this data uh in as timely way as we can.
SPEAKER_02:Lara, what about you? Are you going to get fewer air miles in in 2026, or you know, are you going to finally get that free trip to Japan off so many business flights?
SPEAKER_06:Not yet, not yet. But I would say that there will be two different uh paths. On one side will be all the policy changes that may come uh on the European Commission from the Saving and Investment Union, and how this might impact also level one, level two regulation of a NIR. Let's say let's see how it goes in that way. So there will be a lot of movement on that side. And then on the practical side, on the operational side, what is actually now ongoing. Um I would say that uh the idea is to uh keep improving data quality, keep working the way we are uh running the business and and keep the ratios of uh reporting uh the way they are and and keep uh finding issues. It will be finally or hopefully business as usual. Um and we will keep um supporting uh on our side from the TR side, we will keep supporting our uh clients to uh better check uh their uh quality of the data. So that will be one of our main points for next year.
SPEAKER_02:And Nick, what about uh from your desk? 2026. Is it going to be uh doubling the efforts with a lot of change uh coming through, or are you gonna get time for that uh much needed uh Bahamas beach holiday?
SPEAKER_05:I do I like the sound of that, I must admit. One of my colleagues has just come back from the Sake Shells, and I am so jealous. Um but what do I think for 2026? Well, look, I I think we've mentioned the call for evidence. Now, anything that comes from that is it's gonna be longer term, so we're talking probably five to seven years. But I actually think um just themes from the call for evidence, there's a huge role that infrastructures like trade repositories can play just to ease the burden of reporting on clients across multiple regulations. And what I'd say is I think we're gonna be doing a lot of work on that front from our side, so that's gonna keep us busy and things will evolve. Um, what I'd also like to see um from a personal point of view as an Arsenal fan is us stop being the bridesmaid and us actually pick up a little bit of silverware. Um so that's maybe wishful thinking rather than anything I can actually see in the crit in the crystal ball, but we'll see.
SPEAKER_02:Okay, and uh John, I know you you have lost your voice and what have you. We can't mention Arsenal without saying something about Tottenham's chances, such as they may be, uh, for 2026. Presumably they'll still be in the Premier League.
SPEAKER_04:Oh please don't make me laugh. Um yes, yeah, we will. We will. But I I think the jury's out at the moment, so um let's see. I'm I'm I'm cautiously optimistic.
SPEAKER_02:And what about uh Register UK? How uh is 2026 looking for you from your London vantage point?
SPEAKER_04:Yeah, I mean it's um and it's an exciting, exciting time um for Registrar UK, also Register SA. We've um now that we've implemented the new uh Refit platform, um we're uh really starting to be able to roll out some some really useful um new products and features for our clients, uh, a number of which will go live next year. So I'm super excited about that. Um and um, you know, it's really nice to to see the benefit of our initial pay.
SPEAKER_02:Get that man a strepsel quickly. Uh John, uh I hope you are feeling better and managed to get a good Christmas break. And that is it. We have come to the end of the show. I I guess all that remains uh before we do our traditional uh Merry Christmas to the industry is uh to give a huge round of applause and a virtual studio thank you to Will Parry, Senior Manager of the Bank of England's Financial Market Infrastructure Analytics Division. Will, thank you for taking us on a tour of what I'm officially going to call now the Batcave. Uh moving forwards, uh, that is absolutely great. Thank you. Get some more flashing red phones in there. Apart from that, it sounds awesome. And thanks very much for joining us today. Andrew. Well, I guess uh that's it, Manuel. Uh Manuel doesn't often come on the mic, but a very Merry Christmas to you. Uh Manuel is here in the virtual studio uh 24 hours a day, making sure the show comes together. So thanks very much, Manuel.
SPEAKER_01:Wish you a very Merry Christmas to all of you. Um have a great time with your loves and wishing you all the best for the next year is going to be really fantastic one.
SPEAKER_02:Yes, and from me, Andrew Keith Walker and everyone who helps bring this show together, a very Merry Christmas to you, if that is your tradition. And if it's not, we wish you a very happy holiday season. And if you're gonna be uh spending Christmas in the office, as many of you around the world do, obviously, uh in different jurisdictions and different places where Christmas is just another working day. Uh take an extra five minutes on your lunch break. Nobody's gonna know. Okay, uh, don't quote me on that. And please, uh, if you are a regulatory authority, uh don't sue. Okay, that's everything uh for uh 2025. We'll be back in 2026 with more expert insights, going in-depth and under the hood with all the major issues and changes that are affecting the world of regulatory reporting and making the lives of market participants and regulators alike always a little bit more technically complex, but always a little bit more interesting. And in the meantime, we will see you in 2026. Have a good one. Bye-bye.
SPEAKER_00:Happy Christmas from the FIA. Please take the opportunity, I hope, to put your feet up, spend time with family and friends. There is more to life than just work, enjoy yourselves. On behalf of Cap Gemini, I'd like to wish everyone a very Merry Christmas. Happy Christmas to everyone out there from Register.
SPEAKER_02:And remember, this show has been brought to you by Registry R, which is a member of the Six Group and features members of the Register team and special guests expressing their personal opinions, not the opinions of Register as an organization. There's no representation made as to the accuracy or completeness of information in this podcast, and nor should it be taken as any legal tax or other professional advice. See you in 2026.