Stress testing and reporting fund content are two of the main challenges with Solvency II and EIOPA/ECB reporting. Many fund managers use their own format when supplying fund content information. Data quality varies, which makes the process even more challenging. The standard format Tripartite (TPT) can help address these issues.
Supervisory reporting for insurance companies and pension schemes requires reports to be submitted in XBRL format. XBRL is the open international standard for digital business reporting, managed by a global not for profit consortium, XBRL International.
As the year end approaches, it is time to review the changes in the taxonomy for EIOPA reporting which apply from Q4, 2020.
Many investment funds are currency hedged. This is where the foreign exchange risk is eliminated or “hedged” by derivatives in the investment portfolio. In the Solvency II framework, a fully currency hedged fund can reduce currency risk by up to 25% of the funds market value. However, because of market fluctuations these funds will not always be completely currency hedged. That’s why you should calculate currency risk on all underlying instruments when stress testing the fund content as part of the solvency capital requirement (SCR). Hedging instruments will offset the risk on other investments reducing overall currency risk. Note that the risk-mitigating effect of hedging instruments may also have a significant impact on counterparty risk.
Software and applications are increasingly making use of cloud storage. Almost everyone makes use of this convenient technology in their everyday lives, whether it be to backup the data on their mobile phone or store photographs and other data.
The three-pillar structure of Solvency II will be familiar to many, with the different pillars representing the main areas covered by the regulations. The legislation and documentation which makes up Solvency II is detailed and complex. With many elements in play it can be difficult to understand how all the pieces fit together.
LEI (Legal Entity Identifier) is an international identification number which is used for legal entities (e.g. companies or government entities) operating in financial markets. Institutional investors including banks, insurance companies and pension funds use LEI codes as they are required for supervisory reporting. LEI codes are also useful in the calculation of solvency capital requirements.
Complementary Identification Code (CIC) is a code for the categorisation of assets, used primarily by insurance companies for Solvency II reporting and by pension schemes for reporting to the European Insurance and Occupational Pensions Authority (EIOPA).
Feedback on financial institutions’ obligation of advice on social & environmental aspects
What is NACE?