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The COREP XBRL Project

The COREP XBRL Project. Steering Committee, 2005-06-03. AGENDA. Business case COREP concept COREP project COREP implementation COREP next steps. Risk Management. IS Supervisory. Operations Counterparties Collateral …. Reports Other data … …. Business case: XBRL use on COREP.

gary-davidson
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The COREP XBRL Project

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  1. The COREP XBRL Project Steering Committee, 2005-06-03

  2. AGENDA • Business case • COREP concept • COREP project • COREP implementation • COREP next steps

  3. Risk Management IS Supervisory Operations Counterparties Collateral … Reports Other data … … Business case: XBRL use on COREP Supervisor Bank Bank operations, controls…. Presentation, Analysis… Report ------------------------------ Reception Aggregator XBRL instance

  4. Business case - Definition • COREP: • defining a COmmon REPorting framework around the solvency ratio for credit institutions and investment firms under the European Union Capital Requirements. • (Based on Basel II, Pillar I) • Committee of European Banking Supervisors www.c-ebs.org www.c-ebs.org

  5. Business case - requirements • Flexibility: each supervisor is allowed to choose the scope as well as the level of aggregation of information required; the framework will allow for flexibility also to accommodate for differences in the exercise of the national options foreseen in the Capital Requirements, for instance with reference to the treatment of small institutions; • Consistency: the same concepts and terminology have been used as far as possible; • Standardization: the number of different templates has been minimized (business) and their representation has been formalized into XML/XBRL (computing).

  6. Report 25 ---------------------------------------------------------------------------------------------------------------------------------------------------------------- Business case – European framework Basel II European Law 9X,XX% Basel II compatible Directives 2000/12 & 93/6 Transposition into national Legislation Country 1 Country 2 Country 3 Country 25 National Regulation FSA 1 FSA 2 FSA 3 FSA 25 National Implementation Report 1 ------------------------------------ Report 2 Report 3 ---------------------------------------------------------------------------------------------------------------------------------------------------------------- XBRL challenge!

  7. COREP concept: extension COREP superset of reports Large report Custom report Medium report Small report

  8. COREP concept: extension COREP vs. Pillars Future templates? Pillar I Capital COREP Templates Today Pillar I Capital Pillar II Supervision Pillar III Market

  9. COREP concept: template Template: Dimension 2 Dimension 1 Measure Measure Measure Measure Dimension 3 Dimension 4

  10. EXPOSURE TYPES EXPOSURE CLASSES STANDARD APPROACH CAPITAL REQUIREMENTS COREP concept: Data Matrix All the dimensions are optional!

  11. COREP Project: forecast by January 21st

  12. COREP project: goals • Deliverables • Initial COREP XBRL taxonomy √ 2005-05-13 • To be updated following business changes • Set of non-confidential test cases √Project X Banks • To be populated when Banks decide to participate • Basic collaborative environment √ corep.info • To be improved if helping COREP implementation

  13. COREP project: Architecture • Initial XML/XBRL taxonomy based in COREP • Technological challenge • 20 Dimensions • Exposure type, Exposure classes, Risk weights… • 32 Measure sets • Exposure value, Capital requirements, … • 31 Templates (Dimensions x Measures) • SA Capital requirements, IRB Capital requirements… • Taxonomy description at www.corep.info • Simplest solution for the easiest implementation • Key XBRL “gurus” are participating in COREP

  14. COREP project: Instance <!--Context1 --> <m-re:LastSemester decimals="0" contextRef="Context1" unitRef="Unit1">0</m-re:LastSemester> <m-re:RelevantIndicator decimals="0" contextRef="Context1" unitRef="Unit1">0</m-re:RelevantIndicator> <m-re:OwnFundsRequirements decimals="0" contextRef="Context1"unitRef="Unit1">0</m-re:OwnFundsRequirements> <!--Context2--> <m-re:LastSemester decimals="0" contextRef="Context2" unitRef="Unit1">0</m-re:LastSemester> <m-re:RelevantIndicator decimals="0" contextRef="Context2" unitRef="Unit1">0</m-re:RelevantIndicator> <m-re:OwnFundsRequirements decimals="0" contextRef="Context2" unitRef="Unit1">0</m-re:OwnFundsRequirements> -<context id="Context1"> -<entity><identifier scheme="www.DemoBank.com">DemoBank</identifier></entity> -<period><instant>2005-12-31</instant></period> <scenario> <dims:dimMemRef xlink:type="simple" xlink:href="t-op-2005-06-30.xsd#t-op_DimensionNameBankingActivities"> d-re:TotalBankingActivitiesSubjectToBia</dims:dimMemRef></scenario> </context> -<context id="Context2"> -<entity><identifier scheme="www.DemoBank.com">DemoBank</identifier></entity> -<period><instant>2005-12-31</instant></period> -<scenario> <dims:dimMemRef xlink:type="simple" xlink:href="t-op-2005-06-30.xsd#t-op_DimensionNameBankingActivities"> d-re:TotalBankingActivitiesSubjectToSa</dims:dimMemRef></scenario> </context>

  15. COREP project: Test cases Set of non-confidential test cases: • Anonymous: No reputation risk • Public: to be used everywhere • Early involvement of banks & users • Hands-on experience in COREP • Quality control of XBRL taxonomies • As simple as fulfilling a spreadsheet but… • With the intrinsic complexity of Basel II

  16. COREP project: Test cases flow Anonymous Information Anonymous Information COREP-XBRL Group test@corep.info P R O J E C T M A N A G E M E N T 2 Doc File e-mail 1 3 Doc, Pdf,… Files Excel File Mapper COLLABORATING INSTITUTION Anonymous upload Excel File COLLABORATING INSTITUTION COLLABORATING INSTITUTION XBRL printout XBRL Instance 4 COLLABORATING INSTITUTIONS SUPERVISORS XBRL COMMUNITY OTHERS www.corep.info 5 Public Repository Non compliant test cases Anonymous Comments

  17. COREP project: Request for testing • Common framework for the reporting of the solvency ratio (COREP) by credit institutions • To test the COREP XBRL project, institutions are invited to participate by providing test data on a best effort basis. Please visit www.corep.info for details.  • Who can participate? Any institution that has access to data of banking activities, like for example, credit institutions, consultant firms or any other party interested in participating. • How to participate? Institutions should provide test cases using this spreadsheet (www.corep.info/documents/coreptest.zip) and attaching all the relevant documentation associated. No XBRL knowledge is necessary! • Collaborating institutions will acquire through their participation in this process: • A deeper and better understanding on the COREP reporting framework for the solvency ratio. • A chance to provide comments on how the proposed framework works. This may help institutions to provide comments on the CEBS consultation paper. • An early knowledge about the availability in their systems of the information that will be required in the future for solvency reporting. • The collaboration in this open process will also allow the Institutions to benefit from the experiences, comments, suggestions and questions posed by other members of the banking industry, market participants and XBRL experts. • Questions? e-mail to test@corep.info

  18. COREP project: team • Basic collaborative environment • Multinational project team • 50 participants from 12 countries on kick-off workshop • Different skills • Supervisor – business • Supervisor – IT experts • XBRL practitioners • Banks, consultants & providers • University • Extensive use of Internet tools • Website www.corep.info • E-mail list & repository on Yahoo Group • Conference call

  19. COREP project: Acknowledgments (kick-off workshop)

  20. COREP project: Investment (Feb.-May 2005) (*) Market cost per unit. Source: PwC Around three quarter million €has been invested until June 2005 by Supervisors and XBRL community, of which 300 € by CEBS Secretariat

  21. Supervision Reports Other data … COREP implementation: Model Bank Supervisor Taxonomy XBRL Errors INDUSTRY Internet Risk Management to XBRL from XBRL Operations Counterparties Collateral … Report XBRL ------------------------------

  22. Risk Management IS Supervisory Operations Counterparties Collateral … Reports Other data … … COREP implementation: Model Basel II Basel II XBRL implementation COREP XBRL (National) COREP XBRL (Europe) Bank Supervisor Internet Bank operations, controls…. Presentation, Analysis… Errors Errors Basel II App. Basel II App. to XBRL from XBRL Report ------------------------------ Report ------------------------------ XBRL core File Transfer (National) Didactic model for explanatory purposes only

  23. COREP implementation: Banks XBRL reports can be used for Basel II as well as for IFRS XBRL reports are also useful interchanging information between supervisors Reports XBRL Bank “1” Basel II IFRS Banking Supervisor country “A” Bank “2” Banking Supervisor country “B”

  24. COREP implementation: Banks Reports XBRL • Multiple implementation approaches: • Small banks may use Application Service Provider -ASP- model, outsourcing technical complexity • Banks may report all to all the Supervisors: Basel II & IFRS, Banking & Stock Exchange… • International Banks may reduce supervisory burden when reporting to different countries Bank 1 Bank 2 Bank 3 ASP provider Bank n Basel II Banking Supervisor IFRS International Bank Stock Ex. Supervisor Country Z Supervisor

  25. COREP implementation: Simple • The Bank of Spain is offering as help to the Credit Institutions a converter to XBRL

  26. COREP implementation: Complex PREPARE TECHNICAL SOLUTION Clients Access Channels Services of Security Orchestration / Integrator Infrastructure Services … Logs Services Reports Generation Directory Services Define & implement the logical architecture Integrated Services Reports, Transformation, Analysis, Validation, Storage … XBRL added here! Persistence of data Messages Treatment Connectors, Mappers, Validation, Routers, etc. INFORMATION BUS … Contents Management Commercial Packages Application Services Data warehouse HOST Complex Information System example (Bank of Spain)

  27. COREP Next Steps Where we are now • Taxonomies • Stable release on time: May 2005 • Reviewed release stable for the summer • Instances: Examples published for the industry • Infrastructure: Operative

  28. COREP Next Steps • Maintenance: Business (Bank comments) & Technical (dimensions) • Ownership: CEBS Secretariat • Intellectual Property License model: XRBL Intl.Options: Creative Commons, GNU, others… • Timetable? • Business area developments (MKR templates already done) • XBRL Standards developments • Updates to taxonomy contents

  29. COREP Next steps: Releases Steering Committee Dimensions: Public draft Vendors involvement European Workshop Dimensions: Approved COREP: Published 05-06-03 05-06-28 05-07-31 05-09-15 05-11-07 1Q 2005 Release 0.5 Release 0.6 Release 0.7 Release 1.0

  30. COREP Next steps: Schedule • June • Dimension Specification: Public draft (June 28) • New definitions impacting more than 20% of current templates • Preparing documentation for vendors • Interface specifications & implementation working group to continue. • July • Release 0.6 published at www.corep.info • Vendors upgrading tools with stable technology • Evaluate impact of new business definitions • August - Preparing Workshop materials • September - Workshop with XBRL in Europe • October – Release draft customisations for 3 countries (NL…?) • November • Final Dimension Specification (Tokyo, Nov. 7) • Release 0.7 • Target for a ‘working pilot’ • December – not much • 1Q 2006 - CEBS publish final templates. RELEASE 1.0

  31. COREP Next steps External Influences, cont. • NL - Wants templates operational by 1 July 2006. • Means some customisation for Dutch banking • Assume existing IT infrastructure can be leveraged • Wants final Dutch plan ready 1 October • FR – Q1 2007 – able to receive • Distinctions between Standardised, IRB, Advanced approaches can impact timing • Impact of additional QIS 4, QIS 5 surveys?

  32. COREP Next steps • Assume it takes 1 year to implement technically in any supervisor • Oct 2005 – target for finalising COREP • 1Half 2006 – nothing much happening • 2Half 2006 – earliest data collection • 1Half 2007 – able to receive for SA, IRB • 1Half 2008 – advanced approach Additional Considerations

  33. COREP Next steps Steps to Completion 1/3 • XBRL International operating plan does have the dimension requirements at public working draft stage in June, with the specification following shortly thereafter. It is a top priority and has the total support of consortium leadership and the attention of all key vendors. Calculations, validations and Dimensions are necessary. • Business validation of concepts and their relationships to each other • Need for external commentary on CP04 templates and incorporate into templates. • Insufficient input frombanks about test cases • Filling the templates is difficult (it seems) • Requirements finalisation with respect to modelling needs

  34. COREP Next steps Steps to Completion 2/3 • Adapting legacy systems to the new data requirements (“mapping”) • Lack of awareness / prioritisation by banks of new data requirements • We need to give advice on implementation requirements • End user in banks - increase involvement / awareness • Need local expertise by coming Autumn (urgency) • Need for training to every country • Need more test cases and ownership of mapping tool * • Need for a live demonstration web site that shows end-to-end process • Also documentation on how it works (e.g. links among templates and taxonomies) • Need for a project office to own / manage the site, taxonomies, etc.

  35. COREP Next steps Steps to Completion 3/3 • Templates are now out of synch with taxonomies; need a single source under control • Ability to synchronise differences in collection requirements by using COREP taxonomy • Planned deliverables need to include roadmaps (and maybe more) for implementation, per stakeholder, in order to support an adoption decision. • Requires coordination of roadmaps in terms of timing and milestones

  36. COREP Next steps Draft roadmap • Host taxonomy • Implementation workshop for supervisors • Implementation specification • Maintain taxonomy • Basel II extensions: Other Pillars, other countries

  37. COREP Next steps Draft roadmap • Roles: Business supervisors, IT supervisors, XBRL consortium (Int'l and National), Banks, Universities... • Tasks: Business maintenance, Technical maintenance, Relation with supervisors and European / global XBRL players • Other developments: Composition of the project team & relations with FINREP (sharing IT/IS efforts?); Economies of scale in a multinational adoption, Web site, Intellectual Property… • Medium term strategy of deliverables and allocation of resources.

  38. COREP Next steps Task scheduling the coming months: • Involvement of software developers: Documentation, test cases, conformance suite, technical questions • Involvement of supervisors and banks: best practices, support, recommendations • Preparation of September Workshop, in collaboration with XBRL in Europe • Scheduling of the following phases • Documentation and possible recommendations

  39. COREP Next steps: Options National approach • Only the taxonomy is to be maintained, as well as some documentation. Each country will have to deal with all the topics related with the local implementation. Limited coordination/collaboration framework will be in place. No XBRL Europe Jurisdiction in place. • Pros: Limited common resources. National organizations are now in place. No need for any change. • Cons: Lack of European coordination. If no assistance is provided to other countries; repeated work in each country, no "critical mass" to attract European vendors.

  40. COREP Next steps: Options European approach • A coordination group is created to ensure the maintenance of the taxonomy and its documentation. Technical information and set of tests are provided to the vendors, when updates are to be implemented. This group provides a European level player to work with the XBRL International Consortium, vendors and third parties. Validation of tools and solutions. Best practices will be developed. Centres of excellence will provide common recommendations. Organization of training and help for countries asking for it. • Pros: Complete European solution to be locally implemented. "Export" the solution to other countries as "de facto" standard. Full support of the industry, providing cheap off-the-shelf software, due the large mass of participants. • Cons: A stable organization with some resources has to be built or one that is already stable would need some additional resources to take responsibility. How to allocate resources?

  41. COREP Next steps: Options Adaptive approach • Depending on availability and personal involvement, the actual resources in each moment will deal with the challenges in each moment. Requires a mandate and an identifiable commitment of interested supervisors, may be via a Stakeholders Group • Pros: Efficient use of available resources. No CEBS budget. Easy adaptation to changing environment. • Cons: Difficult of maintaining scheduling. Limitations when reassigning priorities/tasks. Part of the goals would be under resourced.

  42. Manager Quality Ctrl. Expert COREP Next steps: Options Direction Common On Demand Alternatives Proactive Project Office Specific Common Development & Implementation Team

  43. COREP Next steps: Options • The project COFINREP (Bank of France) • for COREP & FINREP templates, to receive XBRL instances from banks • progressively integrate XML/XBRL tools in our information system (for banks, maybe also) • economy of scale for supervisors, banks and software industry one technical solution applied for two new business domains with parallel timetables

  44. COREP Next steps: Options Challenge • The real challenge is not the initial design of the taxonomy; a group of enthusiastic people is ready to carry out this job, as it has been demonstrated. • The real challenge is to locally implement a nice design into a fruitful pan-European system.

  45. Thanks - Obrigado - Merci - Gracias Danke - Grazie - Ευχαριστίες - Спасибо Pieter Bruegel. The Tower of Babel. 1563

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