Regulatory Relief in The USA: A Wolters Kluwer View

Regulatory Relief in The USA: A Wolters Kluwer View

Linda Jamison

Product Manager of Regulatory Reporting for the Americas at Wolters Kluwer

Linda Jamison is Product Manager of Regulatory Reporting for the Americas, at Wolters Kluwer’s Finance, Risk & Reporting (FRR) business. Wolters Kluwer FRR is a global market leader in the provision of integrated regulatory compliance and reporting solutions, supporting regulated financial institutions in meeting their obligations to external regulators and their own boards of directors. Prior to Wolters Kluwer Jamison worked at PNC Financial Services Group as Vice President and Regulatory Manager, with 25 years of service. She holds several degrees from Duquesne University.

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Regulatory Relief in The USA: A Wolters Kluwer View

13.09.2018 09:45 am

Regulatory relief for mid-size banks in the US is here– and it’s a potential game changer when it comes to implementing the right regulatory reporting IT systems. With that in mind the nation’s banks would be well advised to adopt an integrated regulatory compliance and reporting program. We caught up with Linda Jamison, Product Manager Regulatory Reporting for the Americas, at Wolters Kluwer’s Finance, Risk & Reporting business to find out how banks need to adapt their approach.

Can you tell us about what is happening right now in the US when it comes to regulatory relief for banks?

On May 24, 2018, the Economic Growth Regulatory Relief and Consumer Protection (“EGRRCPA”) was enacted which addressed everything from consumer access to mortgage credit to small bank relief to easing of certain Dodd-Frank requirements. On July 5, The Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) released statements regarding the impact of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) on the Home Mortgage Disclosure Act (HDMA) and several exemptions. Next on July 6, The Federal Reserve Bank (FRB) issued a statement with respect to certain FRB regulations and rules effected.  The statement focuses on enhancement prudential standards, reporting/recordkeeping requirements and other requirements.

With respect to enhanced prudential standards, the FRB stated that bank holding companies (BHCs) with less than $100 billion in total assets will not have to comply with current requirements (Regulations Y WW and YY).  The BHC requirements for the total assets of greater than $100-$250 billion will be addressed in the next 18 months. 

Since early July, a number of Agency leaders and representatives have shared thoughts and directions in interviews and speeches and they suggest that the $100-250 billion BHCs and Banks can expect:

  • Changes to start sooner than 18 months
  • A tailored approach will be implemented for the $100-250 billion BHCs and Banks – considerations will include size, cross-border, wholesale funding reliance, non-banking exposure activities and other risks (like the global list of systemically important banks (G-SIBs))
  • Possible elimination or reductions in resolution planning requirements
  • Risk-based and leverage capital requirements likely will remain
  • Stress testing will continue but the cadence will change (and it may be less than annually) and
  • Liquidity rules will likely be less intense and change


Other comments suggest there is potential for some relief for non-GSIBs greater than $250 billion. Small Banks will see further reductions in Call Reporting requirements by making certain items semi-annual and they will get relief from the Volcker Rule. Community Banks, meanwhile, will have “off-ramp” leverage ratio thresholds. There will be a refined definition of High Volatility Commercial Real Estate (HVCRE), HMDA reporting requirements ease and agencies will work together to apply common rules and requirements.

It will not be long before we joint and separate proposals from the Agencies.

So what does this mean for small and medium sized banks in the US? Presumably it has an impact for them?

Increasing or removing artificial asset threshold barriers could spurn a new wave of mergers and acquisitions and accelerate organic growth.


But, while the pace of new regulatory requirements may be easing, Wolters Kluwer believes that regulatory scrutiny will not. Regulators will still have sufficient tools to examine firms of all sizes, to ensure compliance of existing regulatory requirements, in a transparent and auditable way.

Can you explain the change in mind set from the regulators?

When it comes to dealing with regulators, I think it’s fair to say that it’s no longer sufficient to just have the right answer; banks must also explain how the answer was derived. Banks need to demonstrate quality of data and are discouraged from using manual processes in regulatory reporting, internal or external disclosures and other important business functions.

Historically, regulatory requirements have been centered on firms submitting static reports at a specific time, in the correct format. Recent years have seen regulators move to ‘the next level’ in terms of their appetite for more detailed and granular data to get deeper insight.

The appetite for data is increasingly shared by the bank’s senior management level to increase the firm’s overall profitability by using more granular and higher quality information on existing and new market segments.

Traditional regulatory reporting requirements, such as the Call Reports or the FRY-9C require more and more substantiated support (i.e. verifiable sources/trail) and are increasingly scrutinized by the relevant regulators. We expect this trend to continue, especially as it relates to small and mid-sized institutions.

Are there other specific US or international regulations that banks should be closely monitoring?

More recent US regulatory reporting requirements such as the FRY-14 series, the FRY-16 or the complex liquidity reporting requirements (FR 2052a), or AnaCredit in Europe, have transformed regulatory reporting requirements, to be more data driven and/or forward-looking, with a high focus on data quality, consistency, lineage and repeatability.

Although regulatory relief may increase, some of the reporting thresholds banks have already invested significant resources in developing the infrastructure to get access to, calculate and store this information and it is widely expected that they will want to keep this in place to meet on-demand requests from the regulators as well as feed this data into the bank’s internal budgeting and forecast process.

Upcoming US regulatory requirements such as FDIC Part 370 (Recordkeeping for Timely Deposit Insurance Determination) which applies to FDIC insured institutions with 2 million or more deposit accounts with a 2020 compliance date, are yet another example of increased data and infrastructure demands to meet regulatory compliance whether it is a strict reporting or a resolution requirement.

Regulations such as BCBS 239 (principles for effective risk data aggregation and risk reporting), enforce a global trend that regulators are focusing more on obtaining meaningful data assurance vs. receiving static reports submitted by firms. This insight will also be well received by firms’ senior management teams as a way of enhancing internal risk management and decision making processes.

With that in mind, what is the best approach for these banks?

Simply put, regulatory reporting automation will provide a robust approach to the challenges ahead. By acting now and teaming up with a partner whose solutions can scale, small and mid-sized banks can ensure automation not only addresses their compliance needs for today and tomorrow, but also supports their future growth strategy through sound business analytics.

We firmly believe that regulatory compliance should not be an isolated activity, but must be incorporated in the bank’s business as usual and integrated as a core component in a bank’s finance, and risk functions. It’s all about integration of finance, risk and reporting.

Can you elaborate as to what regulatory reporting automation entails?

Automation facilitates the centralization and harmonization of data from the various organizational silos (e.g. finance, risk) that need to contribute to regulatory reports, creating a single source of truth that simplifies the sourcing and verification of data and underpins all reporting activities.

In addition, if implemented with the right partner, it will decrease the overall cost of compliance while investing in a strategic platform that will provide significant economies of scale to meet both today and tomorrow’s regulatory requirements and the bank’s senior management demands.

This is why regulatory reporting has been identified as one of the areas ripest for digital disruption, and RegTech one of the top emerging trends in financial technology. Banks can also leverage this valuable information for management reporting and better strategic decision-making.

How does RegTech play into this?

RegTech is application of cutting-edge hardware, software, design techniques and services to the idiosyncratic challenges related to financial reporting and compliance. The advances that fall under the RegTech rubric are helping financial institutions to get out in front of the stringent reporting requirements and accomplish their efforts to integrate finance, risk and regulatory reporting areas of business in a more effective way.

Modern, efficient RegTech-driven systems can go a long way to ensuring that institutions meet their data management needs.  Additionally, they are essential for creating integrated, forward-thinking organizations that can operate at peak efficiency overall. 

However, it needs to be emphasized that the best information technology will not live up to its promise if executives have not already committed themselves to a more holistic, cooperative way of operating, especially with respect to their data and the systems it runs on.

So you presumably expect an increase in demand for integrated solutions?

Yes, that’s very much the case. Market shifts are driving the need for integrated, risk and finance-enabled regulatory compliance and reporting, underpinned by a unified and flexible data framework to consolidate regulatory data in one place and provide agility in responding to unpredictable future change.

The integration of regulatory calculations, such as highly optimized regulatory capital or liquidity computations and regulatory reporting provides huge benefits in terms of high accuracy, audit trail, minimized adjustments, minimum reporting time and total cost of ownership.

Satisfying the demands of supervisory authorities and maximizing profitability and competitiveness in the marketplace involve similar types of analysis, modeling and forecasting.  Each is best achieved through a comprehensive, collaborative organizational structure.  The glue binding this entity together is an integrated data management system that stores, processes and presents data from all sources in a common, consistent, transparent fashion, while permitting it to be deployed in the most efficient way within each department and for every analytical and reporting need, internal and external.



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