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XBRL as a tool for supervision

XBRL as a tool for supervision. Arnoud Vossen Chairman CEBS Expert Group on Financial Information. Outline. What is CEBS? Plusses of XBRL for supervision Use of XBRL in the EU supervisory authorities Priorities to a more harmonised EU reporting framework. What is CEBS?.

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XBRL as a tool for supervision

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  1. XBRL as a tool for supervision Arnoud Vossen Chairman CEBS Expert Group on Financial Information

  2. Outline • What is CEBS? • Plusses of XBRL for supervision • Use of XBRL in the EU supervisory authorities • Priorities to a more harmonised EU reporting framework Edit document title in the view master slide CEBS document code | 00 Month 2004

  3. What is CEBS? The Committee of European Banking Supervisors is a consultative body comprised of high level representatives from the banking supervisory authorities and central banks of the European Union (other EEA countries may participate as observers) Edit document title in the view master slide CEBS document code | 00 Month 2004

  4. Main tasks: Give advice to the Commission Promote consistent implementation and application of EU legislation Exchange information and enhance convergence of supervisory practices Objectives: Promote cross-border supervisory co-operation and the safety and soundness of the EU financial system through: good supervisory practices efficient and cost-effective approaches to supervision of cross-border groups effective regulation level playing field and proportionality CEBS’ role Edit document title in the view master slide CEBS document code | 00 Month 2004

  5. Development of EU supervisory reporting frameworks Templates for regular reporting by banks to EU supervisory authorities Based on Basel II and CRD for solvency information Based on IFRS for financial information COREP for solvency information FINREP for financial information From a flexible harmonised towards a more uniform approach CEBS’ activities Edit document title in the view master slide CEBS document code | 00 Month 2004

  6. CEBS’ stance towards XBRL • Cover note to the Framework for Common Reporting of the New Solvency Ratio • “While national supervisory authorities are free to decide on the technical transmission specifications to implement the reporting framework, CEBS considers that XBRL can be a helpful tool in constructing a harmonised European reporting mechanism. CEBS will therefore develop an XBRL platform and make it available free of charge to national authorities and supervised institutions. XBRL taxonomies will be developed for both the COREP and FINREP (Financial Reporting) frameworks.” Edit document title in the view master slide CEBS document code | 00 Month 2004

  7. CEBS’ organisation linked with XBRL CEBS Expert Group on Financial information SWG on Auditing SWG on Accounting SWG on Reporting COREP network FINREP network XBRLP network Edit document title in the view master slide CEBS document code | 00 Month 2004

  8. Plusses of XBRL for supervision • XBRL enable cross-border groups to use the same IT transmission standard in different jurisdictions. • Avoiding having multiple systems for each country • Small banks may benefit from a free standard like XBRL and the economies of scale derived from the development of the XBRL taxonomy by CEBS. • Possibility of using same system to other reporting (e.g. tax returns) • Supervisors may benefit from economies of scale. • XBRL provides the flexibility to accommodate in a consistent manner different reporting and legislation. Edit document title in the view master slide CEBS document code | 00 Month 2004

  9. Plusses of XBRL for supervision • XBRL provides the IT framework for the reuse of harmonised terms and definitions. • Regardless of the lay-out of the national templates • Regardless of the language used in the national implementations. • With higher levels of reliability, since the taxonomies incorporate the validation rules needed. • References included in the taxonomies determine the content of the items. • The more widespread is the use of XBRL, • the more benefits from XBRL can be obtained. Edit document title in the view master slide CEBS document code | 00 Month 2004

  10. Conceptually… • Reporting before… and after… Supervisor 1 Supervisor 1 Group A, B, C Common framework Group A XBRL Supervisor 2 Supervisor 2 Group B XBRL Supervisor 3 Supervisor 3 Group C Different templates and definitions Common templates and definitionsSeveral formats Single format Different technologies XML/XBRL recommended Edit document title in the view master slide CEBS document code | 00 Month 2004

  11. Use of XBRL in EU supervisory authorities (COREP) Applying XBRL (12) Not applying XBRL (12) Planned XBRL (1) No information (5) Edit document title in the view master slide CEBS document code | 00 Month 2004

  12. Insight: COREP taxonomy in CEBS members Edit document title in the view master slide CEBS document code | 00 Month 2004

  13. CEBS actions for 2008 - 2011 Convergence in reporting • Standardise remittance date • Standardise reporting frequency 1) Differences in procedures 2) Differences in data definitions 3) Differences in national implementations 4) Differences in IT • Increase transparency of Q&A • Industry experts’ networks • Clarify FINREP IQs Actions • Streamlining FINREP • User test COREP • Subsidiaries data requirements • Simplified approaches for cross-border groups reporting Facilitates XBRL • Versioning policy Edit document title in the view master slide CEBS document code | 00 Month 2004

  14. CEBS actions for 2008 on supervisory reporting • Differences in reporting procedures: remittance date (COREP) • Corridor approach converging by 2011. • Towards a common remittance date • Difference between consolidated reporting & and solo reporting Edit document title in the view master slide CEBS document code | 00 Month 2004

  15. CEBS actions for 2008 on supervisory reporting • Differences in reporting procedures: reporting frequency • Towards a basic quarterly frequency • Some exceptions, eg • Investment firms under art. 9 Directive 2006/49/EC • Summarised information of capital ratio in solo basis for SA institutions • Use of templates for data collection for monetary policy. COREP FINREP Edit document title in the view master slide CEBS document code | 00 Month 2004

  16. CEBS actions for 2008 on supervisory reporting • Differences in data definitions: • Intensify use of current Q&A mechanisms • Publish Q&A in national websites • Set up panel of industry experts in reporting • Clarification of scope of Q&A in FINREP: no IFRS interpretation CRD National laws Supervisory rules Supervisory practises Edit document title in the view master slide CEBS document code | 00 Month 2004

  17. CEBS actions for 2008 on supervisory reporting • Differences in national implementations • Streamlining of FINREP • Lower level of commonality in non-core information • Identify areas with low supervisory interest • Reasons behind the lack of usage of certain templates • It implies a net reduction in the required data • User-tests of COREP • Actual use tested in practise • Involvement external panel Edit document title in the view master slide CEBS document code | 00 Month 2004

  18. CEBS actions for 2008 on supervisory reporting • Differences in national implementations: • analysis of simplified reporting procedures for cross-border groups • Investigate potential alternatives (one-entry point, interconnected databases) • Analyze: • Cost and benefits • Technical and business requirements • Have in mind relevant obstacles (e.g. national discretions) Edit document title in the view master slide CEBS document code | 00 Month 2004

  19. CEBS actions for 2008 on supervisory reporting • Differences in IT mechanisms: • harmonised versioning policy • Cooperation to modify at the same time the Guidelines • Cooperation to change the version of the XBRL taxonomy at the same time. • Give enough time to industry and national authorities to assimilate any changes. Edit document title in the view master slide CEBS document code | 00 Month 2004

  20. Outline • What is CEBS? • Plusses of XBRL for supervision • Use of XBRL in the EU supervisory authorities • Priorities to a more harmonised EU reporting framework Edit document title in the view master slide CEBS document code | 00 Month 2004

  21. Contact details: Arnoud Vossen email: a.m.j.vossen@dnb.nl tel: +31 (0) 20 524 39 03

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