A group of five banks, including Goldman Sachs and HSBC (HSBA.L), have agreed to establish a uniform global standard for revealing customers’ stock holdings. Participants in the group believe the move would increase openness and save costs.
According to two individuals who spoke to Reuters, the group—which also includes Barclays (BARC.L), BNP Paribas (BNPP.PA), and one other bank—is developing a mechanism to reduce the dangers of under-reporting, particularly when investors make so-called short bets or increase their positions via derivatives.
When certain thresholds are crossed, regulators compel investors to register the securities they own, which necessitates a sophisticated and time-consuming review of the regulations. There may be errors and fines if there is opportunity for interpretation.
Banks have been investing in “RegTech” to reduce the expenses associated with following such regulations through automation.
The five banks are now attempting to simplify processes and cut costs while collaborating with RegTech expert Droit.
“This is about whether all the banks across the world understand the rules exactly the same,” said Pete Chisholm, global head of position regulatory reporting at Goldman Sachs (GS.N), according to Reuters. Chisholm also noted that there was “a risk that the market data the public relies on could be inaccurate because of the lack of commonality.” Endoxa is the first bank-led consortium to address global rules on disclosure reporting.
Global Head of Financial Markets Compliance at BNP Paribas The plan, according to Kara Lemont, should ensure legislators and authorities that laws were being followed consistently.
Barclays and HSBC spokespeople confirmed that the banks are a part of the group but would not elaborate.
According to a source who wished to remain anonymous, the banks would collaborate with Droit and a legal firm to create a standard digital machine-readable code that consortium members may use to assure uniform compliance.
