With the banking regulation spotlights focused heavily on uncleared margin reform (UMR) for the last 6 months, you might not have noticed the latest Bank Recovery and Resolution Directive update on record keeping for financial contracts coming into law in October 2016, requiring banks to maintain specific, minimum records on their financial contracts.
We first wrote about this in 2015 (Financial contract data capture – thought you were done well think again) when the European Banking Authority (EBA) were consulting on the draft Regulatory Technical Standards on detailed records of financial contracts.
The record keeping requirement forms a part of the wider aims of the BRRD, the purpose of which is to help authorities deal with failing banks and investment companies in a timely and efficient manner. By maintaining details on the contracts the hope is that the decision making process will be better informed when dealing with such as crisis.
If anything, the near failure of the industry to hit the well-publicised timelines of UMR shows just how broken contract data management is at most financial institutions and understandably so. Processes are still deeply rooted in manual operation and the data storage / interchange format of choice is still a spreadsheet!
It seems reasonable then, to think that banks might not have the necessary data readily to hand should a crisis situation arise.
At Logical Construct we believe that sensible organisations will stop the piece-meal reaction to regulation after regulation and start organising and capturing their data properly, into a purpose built system, so that meeting this latest directive means no more than pointing the regulator at the system you are already using.
To find out more about how to deal with contract data management properly, whether it be repapering VM CSAs under UMR or adhering to the latest BRRD rules, contact us: firstname.lastname@example.org