How Big Data Technologies Change the Sphere Of Regulatory Reporting
Marianna Gorina, Chief Accountant of the Center, and Svetlana Ostrovskaya, Deputy Chief Accountant of the Center, told us about the start and the development of one of the first Russian projects of transition to preparation of regulatory reporting using big data technologies in non-bank credit institution, National Clearing Center.
CNews: How has the activity of the National Clearing Center changed throughout its existence?
Marianna Gorina: “The National Clearing Center” is a unique credit institution that was the first one in our country to receive the status of a non-bank credit institution—the central counterparty. Activities of the NCC are regulated by the Central Bank of the Russian Federation. The NCC has the licenses to conduct banking and clearing activities, as well as the accreditation of the Bank of Russia to perform functions of the operator of commodity deliveries.
From the moment of its establishment in 2006 and up to the assignment of a new status, the NCC had been functioning as a bank and had a universal license to conduct banking operations (except for transactions with natural persons). And in December 2007, it started conducting clearing activities and functions of the central counterparty on the MICEX currency market. The institution of a clearing organization—a central counterparty—has been developing gradually, but steadily, and has been conquering more and more new financial sector markets every year: stock market (2011), derivatives market (2012), transactions with precious metals on the foreign exchange market, SDFI market (2013), the Mosenergobirzha commodity market (2014), grain market (2015), and sugar market on the National Commodity Exchange (2017).
Currently, the NCC conducts bank transactions and performs functions of a clearing institution—the central counterparty—on all markets of Moscow Exchange Group. After the change in the NCC’s status, there was a significant decrease in the regulatory pressure on the standards, but the amount of reporting submitted did not change significantly, compared to other banks. Therefore, the implementation of a reliable system of bank reporting preparation based on the latest technologies is one of our main goals.
CNews: How did these changes affect the reporting process? Are there any new forms and methods of data processing?
Marianna Gorina: The Federal Law No. 403-FZ as of December 29, 2015 Concerning Amendments to Certain Legislative Acts of the Russian Federation introduced additional changes aimed to unify the status of the central counterparty. Both obligations and rights became the same for all of them. New mandatory regulations applicable only to central counterparties were introduced, the numeric values and the calculation method for which are established by the regulations of the Bank of Russia.
As a result of all changes—organizational and legislative—the NCC's reporting was changed: new forms of reporting were added, some forms of reporting for activities not permitted to central counterparties and not included in the license were changed and partially cancelled. In general, the NCC reporting submitted to the Bank of Russia can be divided in two types: general bank reporting and specific central counterparty reporting.
CNews: And what ways to solve this problem have you considered?
Marianna Gorina: Credit institutions in our country provide an infinite amount of different forms and types of reporting to various regulators, and usually its largest amount is prepared for the Bank of Russia. But there is also reporting provided to the Federal Tax Service and Rosfinmonitoring, requiring a huge amount of data to be processed for its preparation. Errors or non-compliance with the mandatory regulations are punishable to the fullest extent of the law. Therefore, it is very important that the software used for data collection, processing, and subsequent grouping into reporting indicators is very reliable, mobile, speedy, and can process large amounts of information for different types of reporting.
Svetlana Ostrovskaya: Upon the launch of each new project or new product on the financial market of Moscow Exchange Group, the time of preparation of bank reporting was increasing. And in the process of complication of the NCC's activities, the risk that we won't be able to deal with the volumes of information at some point and miss the deadlines for preparation and submission of reporting was increasing. Thus, step-by-step, we came to the understanding that we need a an IT system with a better performance. At the same time, we thought about the need to take the preparation of reporting beyond the frames of the gross-book in order to reduce the load on the system in which it is performed.
CNews: Who became your IT partner in implementation of this complex project?
Marianna Gorina: Following the results of the competition, Russian IT company Neoflex became our IT partner, which jointly with us took the risk of making a new step in the field of automation of various types of reporting. For example, tax monitoring is a new unexplored area for everyone, but it is already obvious that a lot of organizations will be interested in it in the near future.
Another factor in favor of choosing this supplier was the system itself that was offered to us. Neoflex Reporting Big Data Edition is one of the first Russian platforms using the big data technology stack designed to automate various types of reporting: reporting to the Bank of Russia, tax reporting, management reporting, and IFRS.