Banks must act now to get ahead of Singapore’s new MAS 610 Reporting Requirements

Banks operating in Singapore will face far-reaching governance and reporting changes due to the proposed revisions to the MAS 610 report.

The proposed changes go way beyond what was initially envisaged by many banks and will result in root and branch reform which will remove the divide between Asian Currency Units (ACUs) and Domestic Banking Units (DBUs).

It will be one of the most comprehensive transformations of the banking industry in Singapore from a regulatory reporting standpoint and could completely change the compliance monitoring and reporting structure for banks operating in the territory.

The MAS 610 reforms aim to increase transparency around recording and reporting transactions and will remove the need to report ACU and DBU transactions separately, as well as lengthening reporting timeframes to once a quarter.

While that may sound like a positive development, banks will also be required to deliver far greater granularity of detail on transactions and many will have to completely change their reporting framework.

Given the scale of the change required, banks operating in Singapore need to act now.

The key issues that banks will face in complying with the reformed MAS 610 requirements will be:

• Complexity – they will be required to provide much more granular detail on the value and type of transactions being reported, the number of new data points would increase significantly.
• Greater granularity will also be requested by the regulator around classifications and maturity analysis, and details of the counter-parties involved, meaning:
  1. Data operational reviews will get more complex with an increase in the number of schedules requested: For instance, the current MAS 610 covers around 6000 cells, the revisions are likely to require nearer to 250,000 cells to be reported. This demonstrates the magnitude of change
  2. Current MAS 610 reporting is essentially a balance sheet prepared by finance. This will change to include much more operational data from departments such as HR, payments, legal, IT etc
•  Removal of the DBU ACU reporting divide means banks will have to look at Trade Booking procedures upstream that would need to be changed – this is far more than ‘just’ a data sourcing exercise but a front to back review of operational processes and procedures.

How should banks respond?

Banks should respond immediately if they haven’t already started to or they risk not having time to introduce the necessary changes.

There are four key considerations that we believe they need to plan into their response:

1. Interpretation – the banks need to go through the proposed changes in detail to understand all the implications and interpretations relevant to them. The amendments aren’t a ‘one-size-fits-all’ change and there is a considerable level of judgement required to identify which requirements are relevant to each institution and their reporting structures
2. Data gap analysis – this is likely to be a key challenge. At this stage banks are expected to have a holistic view of the additional data that would be needed for the revised MAS 610 and identify how they would source that information
3. Developing the data reporting process and governance framework needed to meet the revised MAS 610 rules is likely to require some considerable changes in reporting structures as the data required will include information from diverse departments. Banks need processes and governance frameworks in place to ensure accurate, consistent and sustainable reporting and data management
4. All of this needs banks to have processes and governance procedures in place to ensure accurate, consistent and timely reporting to the MAS in a sustainable manner

Why do banks need to address the regulatory reporting requirements of MAS 610 now?

The changes are complex and banks should foresee a long project time frame from planning, to execution, to roll-out. Changes are too numerous and involve too many touch points to be implemented rapidly.

Banks need to look at considerations such as how they interpret their compliance and reporting requirements – it will involve iterative interactions with teams from various internal departments and advisory firms and this will take time.

The big challenge for the banks is how they undertake ‘data gap analysis’ and ensure they are capturing and reporting all the relevant information.

We see three scenarios that banks may encounter as they do this:

• New data will be requested: Where banks have the relevant information digitally but haven’t captured this in the reporting universe they will need to do so and collate this data. This is the most straight-forward scenario
• Data is available but not digitised and instead is captured through manual processes (e.g. customer on-boarding forms): Getting that information into mainstream data processing sources could require system change, not a rapid process
• Relevant data isn’t captured by the bank at all:  In this scenario the bank will need a data and system change and some of the systems could be bank-wide, they might be beyond the control of local administration and be managed from HQ, in another country. Implementing this level of data reporting change could see banks in Singapore experiencing long waiting times for changes to be considered and then developed by their organisation

While MAS 610 reporting changes could streamline reporting for banks, the short to medium term revisions in data collection and reporting will be significant and require planning now. This does provide an opportunity to use technology to replace legacy paper-based reporting and provide data that will be useful for Management Information, as well as the regulator.

To deliver this, banks need to take a holistic view of the data capture and reporting processes they currently have in place and ensure they implement far reaching changes to future-proof their reporting and compliance procedures.

By Nimoh Mohankumar, Asia Pacific Business Development Director, Lombard Risk