OFR Speaks Out on Regulatory Burden
OFR Speaks Out on Regulatory Burden. The spirit of the founding US Treasurer, Alexander Hamilton, seems alive and well at that agency. At the recent Financial Data Summit held in Washington, the Director of the Treasury’s Office of Financial Research, Dick Berner described the importance, to that agency, of reducing regulatory burden, describing the way that it aligns with efforts to improve data scope, quality and accessibility.
Berner says that in the United States, financial firms sometimes report the same or similar information to different regulators in different ways and through different technology platforms. This represents a “burden, a cost and a source of frustration”… which seems like an elegant understatement to us.
These issues are, of course, longstanding and a reflection that in the US, as in many (perhaps most) countries, the process of inter-agency collaboration is complex and too often fraught with difficulty.
The OFR has been experimenting with ways to break down these barriers, running small, focussed pilots that help surface problems and identify opportunities to improve. These pilots are helping agencies engage with industry and co-operate with each other.
The OFR played a leading role in the creation of the LEI or Legal Entity Identifier and is a champion not just of standardised international identifiers, but financial data standardisation much more broadly.
The OFR is calling on agencies in the United States to embrace the LEI and other open, freely licensed standards such as XBRL, wherever they are appropriate, and Berner praised the actions of the US SEC in its recent steps to propose the mandatory use of Inline XBRL.
(He didn’t mention the collaboration between the GLEIF and XBRL International, but we expect to announce a global LEI taxonomy to ensure the consistent use of the global identifier within XBRL documents in the coming months.)
Berner told the Financial Data Summit that the OFR would take steps to:
- improve data quality and reduce reporting burden including by requiring standards,
- use precise and agreed-on definitions, identifiers, and formats;
- encourage industry-regulator agreement on essential data elements;
- encourage adherence to best practices in data collection;
- and encourage more data sharing among regulators.
To us that sounds like excellent advice for regulators, and industry professionals, worldwide. If pressed, we might add:
- use published, executable data quality rules to help ensure usability of data collected;
- manage data-definition versioning carefully, with open consultation, and in a standardised manner;
- standardise, wherever possible, data rendering at a software independent, metadata level to help with comparability and consistency in preparation and understanding; and
- expand industry collaboration to include industry software suppliers, in order to help with quality, cost and timeliness.
It just happens that all of the above technical capabilities and best practices fall firmly into the world of XBRL reporting, so perhaps we are a little biased. 😉