ITS on Supervisory Reporting: EBA validation rules with a severity of “warning” – how to submit explanations
With the taxonomy 2.9 reporting framework, the European Banking Authority (EBA) has introduced a new classification for its validation rules. The previous categories have been replaced by two classifications: “error” and “warning”.
Both classifications entail different processing steps. The “error” category corresponds to the previous procedure for a breach of “blocking” errors: i.e. in the event that an error occurs at initial validation, the XBRL rules with a severity of “error” result in the report being rejected (similar to the previous “blocking” category). A correction report is mandatory in this case.
In the case of “warnings”, a new procedure has to be applied since the rule breach does not necessarily lead to a rejection of the report and resubmission. The Bundesbank has augmented the current reporting procedure by providing a technically supported application specifically designed for submitting explanations for “warning” rules. This will be available for reporting institutions to use when submitting ITS reports in accordance with taxonomy 2.9 as of the 31 March 2020 reporting reference date.
-
- For every submission which breaches “warning” validation rules (feedback report status “W”), the submitting institutions will each receive an error report in PDF format and a CSV file. Please enter the requested explanations in the CSV file and return it to the Bundesbank. Please provide explanations in English.
- If a “warning” validation feedback report requires correction, the Bundesbank will once again provide a CSV file. Add all explanations relevant for submitting the correction and return the file. Explanation data from CSV files from previous submissions cannot be taken into account when submitting a correction.
- It is not possible to provide explanations for individual submissions with “errors” (E) or “errors and warnings” (EW). You are expected to submit a correction report for the incorrect “error” validation rules.
- For group submissions, this applies to each individual report.
- Individual reports containing at least one error are returned; submit a correction report:
- Individual reports that do not contain any errors but at least one “warning” validation feedback report: submit explanations using the CSV file.
- Individual reports containing neither “errors” nor “warning” validation feedback reports: no further data submission is necessary.
Important: Given the large number of reports from various banks that are contained in group submissions, the Bundesbank believes that, in terms of effective quality assurance, it would make sense for individual CSV files to be submitted for each institution contained in the group submission once their explanations are available. - When correcting or adding to already submitted explanations, the CSV file can be re-submitted to the Bundesbank with a rewritten explanation. The updated content replaces the explanations already provided; empty fields are ignored.
- The possibility of delivering test submissions should be taken advantage of. For testing purposes, it is not necessary to provide explanations for all “warnings”; examples for test purposes shall suffice.
-
By adopting reporting framework 2.9, the European Banking Authority (EBA) has introduced a new taxonomy in the validation rules relevant to Commission Implementing Regulation (EU) No 680/2014 as amended (hereinafter ITS on Supervisory Reporting): “blocking”, “non-blocking” and “warning” have been replaced by two classifications: “error” and “warning”. The new classification of validation rules can be taken from the list of validation rules (see external link "Reporting framework 2.9" under "Further information").
The document entitled “Changes compared to previous version phase 2.9.1” published by the EBA stipulates that triggered “warning” validation rules are expected to be met in principle even if non-compliance with these validation rules does not technically prevent a report from being submitted. If the breaching of a “warning” validation rule is appropriately justified from a supervisory perspective, in these exceptional cases it is acceptable. If supervisors deem the explanation given to be insufficient, the breaching of a “warning” rule is assessed as an error which necessitates correction of the submitted report.
The EBA currently does not provide any option for submitting an explanation within the taxonomy and the reporting framework. However, it has announced that thought will be given to finding solutions for providing explanations. Since a harmonised solution will not be deliverable by 31 March 2020, as a complement to the existing reporting scheme, the Bundesbank has developed an application specifically designed for submitting explanations for breaches of “warning” validation rules in order to make the further procedure for processing reports easier.
-
The EBA has recategorised all validation rules. Consequently, existing “non-blocking” validation rules and newly introduced rules have been assigned to the “warning” category. This move by the EBA means that reporting institutions and the Bundesbank will have to ensure that explanations submitted in response to “warning” validation errors are processed in conformity with EBA requirements.
The Bundesbank has set up a submission channel via a secure ExtraNet connection for institutions to submit explanations. The validation results for all submissions with “warning” validation feedback reports will be cross-checked against the explanations for the individual errors sent by the affected institutions. The Bundesbank will pass on the explanations for “warning” validation feedback reports to the ECB.
-
The Bundesbank’s initial validation has been modified such that, when reports are submitted, the submitter receives a feedback report with the new status attributes “information” (I), “errors” (E), “warnings” (W) and “errors and warnings” (EW). In addition to the feedback report in PDF format, which is already standard in the system, submitters of reports that contain at least one “warning” validation feedback report will also receive a CSV file. For reports where initial validation was completed without error, the submitter will additionally receive feedback with the status of “I” as a positive confirmation of receipt.
This positive confirmation of receipt does not take into account any results of the downstream validation of the EBA’s non-XBRL rules or downstream reviews in the context of the SSM reporting process, however. As part of the downstream validation process, submitters will be contacted bilaterally by off-site supervisors.
-
In the run-up to sending reporting files in accordance with taxonomy 2.9 by the submission deadline of 12 May 2020, which is relevant for the first reporting reference date, i.e. 31 March 2020, reporting institutions will be given the opportunity to test the smooth processing of live reports in the Bundesbank’s systems.
If errors (“error”, feedback report attribute “E”) occur during live operations, a correction report must be submitted. For technical reasons, if a submission contains not only errors but also warning validation feedback reports (feedback report status “EW”), a CSV file is also generated. These CSV files do not need to be sent back to the Bundesbank.
On the other hand, if only warning rules have been breached (status “W”), the submitting institution has to check the feedback. The result shall be either to correct the report or supply an explanation. This explanation should be provided in the supplied CSV file and clearly worded in order to clarify the issue from the supervisors’ perspective. The CSV file is prepopulated with the necessary reference data. Institutions are advised to submit an explanation in English in order to ensure a smooth and efficient exchange of information between the Bundesbank and the ECB. The exchange of information between the Bundesbank and the ECB is conducted in English. Annex “Muster einer Rückmeldung im csv Format” (seer “Further information”) contains the format of the CSV file. The submitting institution should not alter the prepopulated information since otherwise the Bundesbank might not be able to technically assign the explanation to the submission correctly. In the CSV file, the name of the responsible member of staff, their telephone number and email address should be entered in the column for the institution’s contact information.
Annex “Illustration des beispielhaften Ablaufs der Begründungserbringung” (see “Further information”) shows how the process may work.
The file with the relevant CSV explanations – like the original prudential returns – must be uploaded via file transfer in the Bundesbank’s ExtraNet. To this end, a dedicated file naming convention is published (“work area” BGR).
-
The content of an explanation for breaching “warning” rules which has already been communicated for a report pursuant to the ITS on Supervisory Reporting as described above can be corrected by rewording. To do this, the submitting institution should reuse the CSV file provided when the report was submitted and edit the text of the explanation accordingly. Only then is the key information needed for further processing at the Bundesbank included.
However, for a new ITS report with resulting “warning” validation feedback reports, a new CSV file with new key information is provided. This file needs to be completed and submitted again. Explanation data from CSV files relating to previous submissions cannot be taken into account.
A breached “warning” validation rule can be given in the Bundesbank’s feedback report in multiple lines if the rule is violated by multiple data points. Submit only one uniform explanation for each validation rule breached. The submitting institution can enter the explanation for the corresponding validation rule in any given row. However, the first explanation found per rule (beginning from the top) is extracted and used for processing all other instances of the same rule (see examples under "Further information"). Any additional (other) explanations for this validation rule in subordinate, subsequent rows are ignored by the system. This also applies to the accompanying contact data.
-
Submitting institutions have the possibility of sending questions and comments on the envisaged procedure to the Bundesbank (Datenbanken_B41@bundesbank.de).
The initial reports pursuant to reporting framework 2.9 of the ITS on Supervisory Reporting have to be first delivered for the 31 March 2020 reporting reference date. The Bundesbank will therefore migrate the expanded procedure into ongoing operations as from April 2020.
Institutions will be able to perform test submissions in the new reporting procedure with regard to “warning” validations. The Bundesbank will provide information on the exact point in time in the ExtraNet newsletter. General test submissions in accordance with taxonomy 2.9 are already possible in the current reporting procedure.
Should any unexpected problems occur while implementing the envisaged procedure for providing explanations, the institution and the Bundesbank will have to reach a one-off solution that complies with the harmonised requirements.
-