New COREP & FINREP - Experiences

1. New COREP & FINREP - Experiences 5 May 2014 | Rome Owen Jones | CRR Taxonomy Project EBA

2. New COREP & FINREP – EBA Experiences • The chicken and egg problem • The “two level” problem • DPM / taxonomy split & the wider process • Validation rules • The near future

3. The “Chicken and Egg” Problem • The format and tools • working at the edge of the XBRL standard • using the “under development” Table linkbase • DPM approach and highly dimensional XBRL had had limited exposure. • How can you define and impose a Europe wide reporting format in the absence of widespread software to build, test, check & use it ? • How will the market build such software in the absence of an agreed format? • Testing • Much larger data model than in most previous XBRL projects, everything changing at once – the legislation, policy, business model, data gathering and reporting chain • Limited realistic test data – and unlikely to be any until real reporting imminent

4. The Market Based / Kevin Costner Solution: • “If you build it … they will come” • Field of Dreams - 1989 • A wide variety of software vendors and consultancies have developed solutions – as have many reporting institutions. • A selection can be seen over these two days. • Developed the format whilst the standard was still being worked on • Inevitably we have ended up using a non-finalised version. • Expect the EBA to update to the finalised version in a future release.

5. The Reporting Landscape – The “Two Level” Problem • Each CA has choice of mechanism for first level reporting • How should the EBA communicate precise data requirements in the absence of a common format? • Who is responsible for what? EBA XBRL CA Reporters Vendors EBA XBRL Own XBRL EBA CA Reporters Vendors Own format CA Reporters Vendors

6. The Reporting Landscape EBA XBRL Reporters CA Vendors XBRL Taxonomy Relevant EBA XBRL Own XBRL Taxonomy EBA CA Reporters Vendors EBA XBRL EBA XBRL Own format Reporters CA Vendors DPM Relevant

7. The Reporting Landscape - Experience • Fairly complex landscape • Fuzzy responsibilities • Uncertain communication channels • Has taken time for all CAs to make and communicate their decisions • Even when using EBA XBRL, many practical questions on first level reporting remain the domain of the CAs. EBA XBRL CA Reporters Vendors EBA XBRL Own XBRL EBA CA Reporters Vendors Own format CA Reporters Vendors

8. DPM / Taxonomy Split • What should the Data Point Model be for? • Communication?(to precisely define/explain ITS) • Data collection? (to create a taxonomy) • Analysis? (to support usage of the data) Regulations Transmit to EBA Taxonomy DPM Templates Report to CA Instructions Understand Data Requirements Validations Analyse Data? EBA Business experts EBA IT experts Competant Authorities Credit Institutions

9. DPM / Taxonomy Split - Experience • Good: • Get good, helpful feedback in Consultations • Get feedback on DPM from people who would be uninterested in / unable to understand XBRL • Bad: • Consultation timescales not long enough (DPM + particularly XBRL) • Relatively little feedback • Get significant feedback after the official window • XBRL savvy are often uninterested in engaging until XBRL available. • Miss the chance to influence at DPM stage

10. The Process • Fairly linear: • ITS and templates  DPM  XBRL Taxonomy • Each stage consulted on and finalised before the next. • Experienced typical “waterfall” issues: • Problems "set in stone" by the time they are realised • Little chance to correct errors/improve impact of decisions of earlier stages • Slippage of early steps (e.g. regulation, ITS) cuts time for later ones • Consultations only pick up views of the main audience for each individual step (e.g. policy for ITS text/templates, technical for XBRL)

11. Future Improvements • Since size & technical innovation in future releases will be less • Can aim to bring the ITS, DPM and Taxonomy releases together • Maximise time for adjustment/correction • Engage the complete audience at once • Approach • Avoid specific consultations with (very) short windows • Keep an “always open” channel for feedback on DPM and XBRL • Incorporate later feedback in next version or patches.

12. Validation Rules • Including and publishing validation rules was ambitious: • Time pressure, lack of test data, systems, performance concerns etc • But necessary to trigger development in reporter/CA systems • EBA recently published a list of rules that should not be applied • Expect a patch update to the 2.0.1 taxonomy removing the disabled rules to be published shortly

13. Near Future Complexity – Outline 2014/15 Timeline August ‘13 December ‘13 May ‘14 September ‘14 January ‘15 June ‘15 October ‘15 • For the next 6 months • Increasing overlap of multiple phases of taxonomy development, patches, implementation and usage • Rapid change • Even shorter timescales • After that – gets better, settle into regular (semi)annual update cycle XBRL Dev Implementation L1 Submission ITS & DPM XBRL Dev Implementation L1 Submission L2 Remittance ITS & DPM ITS & DPM XRBL Dev Refine+Patch L2 Remittance Implementation L1 Submission XBRL Development Refine+Patch L2 Remit. Implementation L1 Submission L2 Remittance

14. Owen Jones • owen.jones@eba.europa.eu