Michael Shashoua: The Ides Arrive Early
Last month’s launch of the International Data Exchange Service (IDES) by the US Internal Revenue Service (IRS) seems intended to address past complaints that the IRS was not adequately defining what would be required for compliance with the US Foreign Account Tax Compliance Act (Fatca). IDES allows firms and national authorities that have entered intergovernmental agreements (IGAs) with the IRS to securely report relevant account data. The service also lets firms securely exchange information with each other, whether they have IGAs or not.
Preceding IDES’ debut, foreign financial firms had to obtain a GIIN identification number by July 1, 2014, in countries without IGAs, and by January 1, 2015, in countries with IGAs. Next, firms must meet new annual reporting deadlines in March and September this year, raising the question of whether IDES will be sufficiently easy to navigate and functional enough to allow that to happen. Firms in markets without IGAs must report by March 31, while firms in markets with IGAs have until September 30.
Further Adjustments?
In a column last March, I asked if the IRS might have further adjustments to what had been a February deadline for having reporting processes and customer remediation in place. IDES does not reportedly include any such major changes to the substance of what firms must file and provide for Fatca compliance, so that appears settled now.
However, as Micah Willbrand, global director of anti-money laundering product marketing at Nice Actimize, points out, from a technological and operational perspective, the IDES rollout is likely to strain firms’ ability to meet the March and September deadlines. The intent behind IDES is to give firms a tool to meet the deadlines with the resources they have, Willbrand says, although it could become trial-by-fire with the first-ever annual reporting cycle, using a new, untested system.
Corporate Actions Interest
Meanwhile, as my colleagues and I prepare for this year’s Financial Information Summits, we consider whether corporate actions has enough interesting or important developments happening to warrant discussion. The question of the importance of corporate actions is particularly of interest for the North American Financial Information Summit to be held in New York in May.
IDES allows firms and national authorities that have entered IGAs with the IRS to securely report relevant account data.
Organizations like the Depository Trust & Clearing Corp. (DTCC), which has an interest in addressing corporate actions as a data management challenge, will see a lot of action happening in the field. However, because corporate actions are considered a back-office responsibility, other organizations end up seeing them as the crazy aunt in the basement—US presidential candidate Ross Perot’s term for what everyone knows is there but no one wants to acknowledge.
Part of the problem could be that the industry has gotten hung up on the sub-topic of corporate actions messaging standards, and whether a bigger swath of the industry will adopt the more advanced ISO 20022 standard. What appears to be more material, and more important to actually making corporate actions more compelling as an area to address, is growing sophistication in the number of fields included in a corporate action, and issues that could be created by discrepancies in the same data elements from different sources.
Also, increased volume and complexity ought to be sparking greater interest, just as that development did with legal entity identifiers, when their registration started driving new volumes of data to manage.
Industry professionals began speaking more about the new complexity in corporate actions last autumn, and told listeners of our October 29 webcast how this complexity will make efficiency and optimization of corporate actions processing more challenging. It remains to be seen whether it’s so challenging that it captures more interest in the industry.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Regulation
Preparing for the gathering storm
The Markets in Crypto-Assets (Mica) regulation came into force across the European Union on June 29 to enhance the transparency and integrity of the industry’s burgeoning crypto markets. Travis Schwab, CEO of Eventus, discusses his firm’s Mica strategy…
American Bankers Assoc. asks SEC: Do you know what you’re doing?
The industry group disagrees severely with regulators’ interpretation of the Financial Data Transparency Act, hinting at possible legal action in a recently published comment letter.
DORA will change the buy vs. build debate… maybe
Waters Wrap: With DORA’s deadline looming, trading firms are having to reassess their long-term tech strategies. Anthony wonders if that means more building and less buying.
The SEC needs a hand with artificial intelligence
The SEC wants to take a tough stance on AI, but it has a talent problem… or a marketing problem. Or both…
Off-channel messaging (and regulators) still a massive headache for banks
Waters Wrap: Anthony wonders why US regulators are waging a war using fines, while European regulators have chosen a less draconian path.
Banks fret over vendor contracts as Dora deadline looms
Thousands of vendor contracts will need repapering to comply with EU’s new digital resilience rules
Chevron’s absence leaves questions for elusive AI regulation in US
The US Supreme Court’s decision to overturn the Chevron deference presents unique considerations for potential AI rules.
Aussie asset managers struggle to meet ‘bank-like’ collateral, margin obligations
New margin and collateral requirements imposed by UMR and its regulator, Apra, are forcing buy-side firms to find tools to help.