How to apply ECB EGDQ plausibility checks for CRD reports, The DQM case study

The context

Since 2018, National Supervisory Authorities recommend to both Credit Institutions and Class 1 Investment Firms to apply ECB EGDQ plausibility checks on their reported data before to disseminate them to the those supervisors.

For some countries, National Supervisory Authorities add to the ECB checks additional checks defined by their business Data Quality or Data Governance cells.

• In Luxembourg, the CSSF maintains and applies CSSF plausibility checks, defined for banks.
• In the Netherlands, the DNB also maintains and applies additional data quality checks.

This means that European Credit Institutions and Class 1 Investment Firms have a real interest to follow-up and manage these validation rules because the preoccupations of their authorities can quickly be their concerns.

These plausibility checks have been introduced by the authorities to counterbalance the weaknesses of the XBRL standard that cannot treat data from different XBRL instances.

In addition, in the data governance mindset, risk or compliance managers of financial institutions can also have their own data quality rules that require an implementation.

The solution

It consists in extending the validation rules defined by the taxonomy (formula linkbase) with these “business-minded” validations; it does not change the validation process; it only extends the number of rules to apply in the case of multiple reports. The solution follows the guidelines defined by DPM Refit; it also supports data in OIM/CSV format.

The main features of the solution are:

• Uploading of the new version of the ECB EGDQ plausibility checks in the same format than the
  format used by the ECB for the publication, i.e., Excel files;
• Uploading of the related reports, i.e., in XBRL, for COREP, FINREP, AMML, LCR Delegated Act, etc.
• Application of the plausibility checks defined on the data of the related reports.

Key terms: data governance, risk management, compliance management, data quality management.

XBRL specifications: XBRL Specification 2.1, Table linkbase 1.0, DPM Refit