 Mae'r fod yn fawr, mae'n bwysig iawn, yna byddwn i dŵr ddyFordd wedi unattu edrych Ffbyrdd a'r ddyFordd o'i ddyFordd ond mae'r ddyFordd o'r ddweud o'u ddyFordd i'r dduffinus dduff, mae'n ddweud o ddweud o'u ddyFordd Fy haf y ddyFordd y ddyfodd mae'n ddweud o'r ddweud o'r ddyFordd 11. Hefyd yn fyddaeth ydw i chi'n gweld allan i ddyfodd Is it in spirit to what the regulators are asking me? So those two questions, please keep in the back of your mind. And I'll try and frame them in the context of our industry spectrum. At one end of the spectrum you have the large, well-established financial institutions. At the other end you have a vibrant fintech market, smaller niche boutiques. So at the large end of the spectrum you have your big banks, such a bank being one example, the big universal bank, city bank, JP Morgan, etc. Where historically, well over a decade now, they've had big elaborate corporate functions who have had to deal with a plethora of very complex and increasingly more complex regulations. To name a few, CCAR, US Basel III, FRTB, MIFID, the names go on. And just to put it out there, this is a tax for these organisations. It's not a revenue generation opportunity for these organisations. But it is a critical aspect of their business to be compliant and to be able to be in that particular jurisdiction and do the businesses that they need to do. So it is an overhead however and a huge cost to these organisations. So that's one end of the spectrum. You have the other end where you have a vibrant fintech market that's increasingly growing. They're very nimble in nature compared to the bigger, more well-established institutions. However, they do have a very high bar to enter into certain markets and into certain jurisdictions simply because of the regulations. That is the thing that is keeping them out of growing even more. So you have these two ends of the spectrum and to really answer those two questions that I put out there. What regulations apply to me as an institution and the way I've interpreted those regulations is it correct and in line with the spirit of the regulation? And just to give a anecdote, typically the latter question to address, each organisation has to do, usually comes up with their own bespoke way of interpreting the regulations. So the regulators come in and they spend good solid six months to one year doing an examination to ascertain has that regulation been implemented in the correct way and in the intended way and with the intended outcomes. So it's not an efficient process and it's a huge, how can I put it, anchor on the entire industry as a whole. So this is where really open source comes into its own. And I think it plays a really pivotal role and the timing, everyone's talking about the timing being critical here. And the story of open day standards for two things come into play. Regulatory ontologies and taxonomies, that's number one. And number two is coupled with this, how do we have a standardised mechanism of semantically linking those regulatory ontologies with the descriptions of the firms themselves, an ontology of the firm, if you will. So those two concepts and the latter one is really important here. So let me break this down so it's everyone's on a level playing field. So I'm not going to assume everyone knows what an ontology is, so I'm just going to quickly, the high level allows us to create relationships between different data types or objects in the context of an information architecture. And ontologies are typically more versatile than, say, a taxonomy, which is typically hierarchical. So ontologies can tell you sideways relationships, they can embed more complex rules based relationships and so on. So it gives you a much more richer framework in order to be able to maintain those relationships and keys. But I want to start by saying there's nothing new about regulatory ontologies. I'm betting that most of you would have come across a regulatory ontology or seen someone speaking about regulatory ontology, and the objective isn't to recreate the wheel. So that's super important. And just as an example, we've been talking to Fibo, for example, about the regulatory ontologies that they've been building out in the industry. But where the value proposition comes in, and this is the hard bit, is how do you semantically link those regulatory ontologies to how you describe an organisation or an financial institution? That's the key. And that is the complex bit, but the value proposition of what we want to talk about here. So let me kind of, what I've just said there, break it down into a value proposition at a high level. Imagine we had an engine, and you have two inputs going into that engine. One is your regulatory text, or maybe a standardised way of representing your regulatory text. The other is a way of, or a standardised way of describing your financial institution. That goes into your engine, where you have your open data standard, which then links these two semantically. And then that is where you come to a position where you don't get into the business of trying to interpret something, but you can focus on higher value proposition items like, okay, this is what I need to calculate. This is what I need to report on. And that's the premise of what we're proposing in this presentation. Now, as I had mentioned, open source is the game changer here. And as an anecdote, in Deutsche Bank, where I work, we have these innovation forums, and I remember about a year ago, actually, one of our colleagues, he came up with the idea, we know what, this would be a great idea if we had this regulatory ontology, we built it in our organisation, and we could really simplify things. And interestingly, he actually won the Innovation Award, but he didn't have much traction post winning that award. And the reason why was that very quickly adorned on everyone is, this is hard. This is actually really hard to do. There's so many regulations, the size of the problem is so complex. How do you do it? And I'm willing to bear, a lot of other institutions have thought about this idea, but just didn't pursue it simply because of the size and gravity of what that entails. And frankly, it's not a revenue generator at the end of the day either. So why would we? It's been far too easy for individual institutions to just get a whole bunch of very smart, bright, quants methodology guys, focus on the legal guys, focus in on the regulation, and do a point in time solution to get over that hurdle and move on to business as usual. So that's really been the modus operandi. And let's talk about vendors as well. This is an interesting paradigm. Vendors have tried to create a, I guess, a more proprietary IP within their products. I'm not going to name any vendors here, but there's many that most of you will know where they provide out-of-the-box templates. But I'm yet to come across a solution that you can easily integrate your input data to that vendor product. That's where you always get stuck. And that's where a lot of our investment in time goes in. So this is where open data standards, we believe, come to the rescue because it's, by the very nature of the problem, it's a horizontally scalable item. So, and I think this is interesting that we should reflect on a bit because not all open source solutions are easily horizontally scalable. And what I mean by that is there may be some open source items that you put out there, but it has a very high bar in terms of getting to understand the core framework or the code base at a sufficient level of depth before you become productive to extend it out. That's a natural thing. But with something like an open data standard, you don't have to solve the entire problem in one go. You can incrementally build on it depending on the jurisdictions, the different regulations, the different aspects of the regulations, and you can incrementally add. And that's where the value proposition of opening this up as a open data standard in an open source context really comes into its own. And another interesting thing, we were discussing this, and we're saying, actually, there's actually other things that open up here as well. For example, niche regulations, where one of my colleagues, he works, he used to work in a Swiss bank, and he was saying, yeah, in Swiss banking you have all these really niche, you know, FINMA-based regulatory things that, unless you're a Swiss bank, very few other banks would want to get into that business because it's just too much overhead. It's not worth it. But imagine you had a platform and an ecosystem like this driven by this common framework and ontology where people could add things on and they started adding these niche ones on as well. And that's why we need a new market for a whole segment of the organisation and not just for retail and wholesale banking. Even if you think about emerging markets, that's an opportunity as well. So it starts to open up a lot of doors which I think are really interesting and worth reflecting on. So what is the SOA of why do we want to do this and the value proposition of an open source thing or jointly want to collaborate on why does this make our lives better? So there's three value proposition pillars that we've identified and we want to articulate. The first one is really industry image and integrity. So one, I don't think it's any secret that financial institutions and regulators has been a bit of a chess game where financial institutions have been ways, finding ways of trying to game the regulations themselves in their own interest. No secret. We want to avoid that though in reality. Secondly, it promotes transparency of how we do things. And I think the standardisation element is key. Today we don't have standardisation. It's pretty much each bank goes into their own little silo, comes up with a solution. As I mentioned, big exam process. They tweak it. There are more complex aspects where banks may lobby together because they find a certain aspect of the regulation is just not practically feasible. And I think here creating that transparency and standardisation is fundamental because it also has an impact on how we operationally interact with the regulators. And I'll come on to this in a moment, but really we can streamline the processes by which we interoperate with regulators to understand the spirit of are we truly implementing the regulations with the desired outcomes that the regulators had in mind. And I'll come on to that in a moment. And overall I believe having something that's standardised, it reduces the impact of reputational risk on individual firms. So you have a systemic robustness that you introduce into our industry, which I think is a good thing. The second aspect is around the operating model. So I mentioned that we can start to streamline things with the regulators, but in terms of the overheads within financial institutions, you start to slim that out because you have something that's standardised. You have people contributing to that rather than everyone trying to solve that in their individual silos. And so it's a cost reduction effort within the industry as well. And moving to the other end of the spectrum, as I mentioned with the fintechs, the smaller boutique firms, you start to create a framework where they can leverage common things for them to enter into markets they couldn't before. And really this is the foundational element that could help us on that, to level up the playing field and really create a vibrant regtech, fintech ecosystem. And as I mentioned, both can then focus on higher value proposition items like the calculations, like the reporting. So that's in terms of the operational elements of how it starts to change things. And then finally, in terms of the final value proposition pillar, is combating systemic monopolies. So I'm willing to bet that there are big data organisations out there that are looking to build out their own version of this. And what we want to avoid is, particularly for regulatory items that we are then attached to one or two big data providers to try and solve problems like this. One, it introduces a form of indirection in terms of for the regulators themselves to try and understand are people complying with the actual regulations. Two, for the financial institutions themselves by the very natural monopolies, you get a financial hit. You have less optionality in the market and these firms will charge us for it. So from an entry trust perspective, we're promoting moving away from that whole aspect. So those are the three big value propositions that we're putting out there. But the other element that I think goes hand in glove with this entire topic, it's not just an IT tech or data thing. Governance and operational model is super important, especially when we're talking about open sourcing a regulatory linked objective. We have to think about the governance model for this. And I don't think we have one yet. I'll be open and transparent everyone. This is a learning curve that we need to go through. But as we build out, as I mentioned, the outcome of those two questions of how do we semantically link the regulatory ontology with the financial firm's description, in parallel we need to also build out that operational governance framework. It goes hand in hand and you can't do the two separately and it's super important. Interestingly, so I was reading the digital regulatory reporting paper published by PA consulting on behalf of the FCA and the Bank of England on how they want to automate and introduce machine readable regulatory reporting. And in that paper they actually articulate a framework for assessing the efficiency of an operating model for governing such things. And on a side note, I actually think if you don't have something like this, that paper's objective become very, very difficult by the way. But in terms of that operating model, the last thing is stakeholders. And this is something that we've been reflecting on quite a lot. Stakeholders are fundamental and, again, this goes back to the antitrust point. We have the regulators themselves. We have the regulated firms. We have legal firms, advisories that are involved. And you have vendors. And each one has slightly differing concerns and perspectives of their position in the market. And really from an operational and governance perspective, how do we be inclusive of all of them so that we are not falling to the trap of antitrust, all of these things? How do we bring them all into the fold to work together on this? That's number one. There are other elements. As I mentioned, horizontal scalability. The fundamental principle of this is horizontal scalability. You don't get that, this doesn't work. So how do we make sure we monitor that horizontal scalability, bringing people into the fold? How do we get that collaboration? How do we monitor that collaboration? Make sure that there is that continuous iterative process from all the contributors. Time to market. That hopefully is an obvious thing when a new regulation comes. How does this structure address that in a timely fashion for the regulators and for the regulated firms? And then finally operational risk. And the operational risk part is actually very interesting. And it goes back to the point about one of the value proposition pillars where potentially we have the opportunity here to create a real-time feedback loop with the regulators. Rather than try and interpret the regulations up to a certain point, then go back in a very batchy way. It's slow and it's cumbersome. If we can create a real-time loop with the regulators saying, is this right the way we're starting to define the ontologies? Is this what you mean? We can start to create a more systemic efficiency into our process where the regulators, we tick their box, but also from the regulated firms, it makes it a lot more clearer, transparent and easier for them to follow through on what they need to do. And we remove that uncertainty that exists in the execution process of implementing regulations within these organisations. So that, I do think, is a game changer in the way we would do things. And if you think about things like machine-readable regulations, all of that really comes into its own and is really a game changer in terms of the operational model for the industry as a whole. So, as I said, and I want to introduce James and Sarah, who I've been working very closely with from Braithwaith and ChangeGap. We're asking, we need people to get involved. And as you can see, I mean, I'm going to move on to really on this slide. You can see we have already engaged with many, many parties and we're in, you know, either they're involved or we're in discussions with them. And really this is not about trying to build our own thing on one side. The success of this is really about how do we bring the industry together. And, you know, we're looking to finos themselves, we're looking to various other parties. How do we come together, participate, build this out? Because the timing, we believe, is key now. Everyone is talking about this. And if we action this, we can be part of something which is quite game-changing in its nature. So, I'll stop there, I'll leave this slide on there and I'll open up to any Q&As and James and Sarah will also help me on that aspect. But thank you very much for listening. So, you're trying to get this down when it's something material to one LE and not to another or whichever regulator. I mean, it's really difficult. Is that part of the discussion this slide? I mean, James, do you understand that? I'll take this one. So, I think we deliberately set out two key questions here. One is what regulation applies to my firm and the other is then how do I... The core focus of phase one is to be able to articulate the what. So, in this sense, we're looking at legal entities, we're looking at the licences that they hold, the products that they offer to the market, the services they offer, and based on that, being able to define, okay, this is the list of regulatory obligations that apply to this firm. You then have a whole second order question of, okay, given now I understand what applies to me, how do I reply to that? We could bore the ocean, we could spend years and years working on this. I think at the type of entity, the type of licence, the product category, you can answer the what and provide a lot of value to the industry relatively quickly. There are lots of people who have done bits of this already. There are solutions out there that we can leverage for parts of this. And then, as Tanym's been saying, the real objective here is to crowdsource the wisdom of everybody here and all of your organisations to then take each domain, and when I say domain, I mean types of firm, sectors of the industry, types of product, and really deepen the knowledge graph. It's being built on a graph technology that allows us to scale horizontally to basically to leverage the input of the industry. We're building a knowledge graph, a semantic model of the firm and of the regulatory world and linking the two. We've had some great conversations with some regulators already who are doing great work in terms of digitising the rule books, but that's still no use if you don't have a semantic representation of the firm. We're building a framework to represent firms and a framework for regulation and the model, the ontology that links the two of them. But it really is a framework for the industry to come and help us to deepen to build out every single domain. Graham. Oh, cheers. Do I have to stand up? You can sit down. James, you've semi answered my question. My question was this. You talked about how the most important thing of all is this kind of interface or glue, if you like, or adapter between the regulatory ontology and the bank's own ontology. We're currently engaged to trying to define an ontology for a large financial services institution for their own stuff, whose logo interestingly isn't on your slide here. Hopefully we can add value in some way in the future. The question is this. As far as I can tell, most banks don't even have an ontology of their own stuff. Never mind joining it up and adapting it up in a clever way to a regulatory ontology. By question, how applicable is what you're doing to firms that haven't even figured out their own stuff? Never mind joining it up to the regulatory report except in a talk way. Just to say actually in terms of the scale of this and needing to prove it can work and to make it happen. This really is a bit of a burning platform and there's a limited time window in which we need to get this going. We're looking for parties to work with us so that we can do proofs of concepts. We very much have the global vision. There's a timing thing here as Tanym said. There's lots of work that has been done that we can leverage. In order to make it real and to deliver that incremental value that's where we need firms, regulators and vendors to work with us. That's a good case in point because why should everyone have to come up with their own ontology? Why should everyone have to do the interpretation? One current example is the investment management industry. There's about 3,500 firms just in the UK getting scripts with IFPR which is an adaptation of CIR. 3,500 firms doing their own interpretations is crazy. I think the proofs or concepts will be really key. Having set out the vision here and partnering with Finos but also as James said with the regulators and people like EDM council, there's so much good work going on and if we don't all work together and divide and conquer then we're just going to be in this perpetual well. On the title slide there was a statistic. I think it was a Bloomberg statistic that said $55 billion is the projected value of the red tech industry by 2025 and a huge amount of that investment by individual firms or people investing in them is potentially going to be wasted because they're developing their own proprietary taxonomy ontologies. There's probably a lot and I think there's a lot of people saying it's just all too difficult or someone else has got it doing it. We've got a Finos umbrella structure where we can work with and get people corralled together and this is the opportunity. You're absolutely right, there are probably lots of people trying to do the pockets of activity around the place and it's not just for the service it's the energy industry so really struggling. The horizontal scalability point is huge here. We will set out the framework in which others can then collaborate and bring all that energy together to solve the problem. Even if we spent the next five years all of us in this room working on it we wouldn't be able to solve all of this but we do need that framework this is to Graham's point we need at least a framework because a lot of firms look at it and think I want to do it but it's a bit too difficult. Why isn't there a standard out there? We're working with them. We're still part of the REGSIG forum so we all met in the REGSIG forum actually. We're trying to connect them by use cases so we've discussed with a couple of firms and vendors about choosing a use case that has relevance across and that's how you can compare and validate the work. We are for this little... and then launch the specific project to tackle those things because we'll write it at that moment. Sorry, Russell, do you want to say something? You're part only of an average and all of your questions are being posed in which ones to fight you and one of the most famous in the fight to deal with them. But there's also understanding your own work and just understanding what's a bug here, right? Understanding characterising your own application to people hierarchy space hierarchy all of that metadata to determine the regulatory environment is also equally important so you're not only just understanding the language but understanding the space in the common language. That's what we're doing and we're helping to organisations to do a lot of work here to try to standardise their data to describe yourself and perhaps engage through these common rules and the qualities and so on. Yeah, absolutely. I think the framework that we're conceiving in the first phase or two of this is very much top-of-house what applies to me but the extensibility is huge. All of the work you're doing through Waltz and the legend language for codifying the firm's operations can all be brought in here to expand the graph of the firm to get a richer connection to what applies to me and what can I do. If you get down to each individual instrument particularly some of the exotic instruments you get into millions of combinations we're not going to do that on round one but if we're able to crowdsource the wisdom of the industry we'll eventually be able to build that richness. Back to some of the legend again about data and how do you talk about the same things in the same way how do you glue things together and that's also what FDC3 is about so I think it's not only about joining forces in the regulatory space but really in the finance space as a whole that needs to happen. I think if we can get a common language for describing firms that opens up the ecosystem on Sarah's favourite terms opens up the ecosystem for all sorts of vendors whether they're regtech, fintech whatever sort of technology to communicate using a shared understanding of the firm. Every vendor we've spoken to has said as soon as you've got something in the space let us know but they don't have the time or funds necessarily to do this so ecosystem definitely is the right thing. The other thing that Tanya mentioned is the operating model so we've kicked off a conversation around this because even if we come up with the most amazing data standard and everyone loves it and agrees with it how's it going to stick adoption is key and we can't wait until we're a long way through this to start that conversation so there's a few good examples in the industry like OBIE and a couple of others so we're sort of looking at those and thinking what would be a workable model and if we can get some critical mass around that then they can be evangelising and getting people not only to get involved but to start the adoption journey. There isn't really a solution for that like even in individual organisations we've had to set that up in a full classroom but if you're talking across the organisation that needs to happen and I think that it sounds like the election team has made a good start for the federal society but like that takes off taxonomy and be maintained as the industry evolves yes quite the opposite actually a huge pull so Tania mentioned the digital regulatory reporting work that the FCA in the Bank of England have been doing over the past couple of years our engagement so far in the Bank of England in particular has been very positive because regulators understand that they can't their knowledge of firms is far poorer than the firm's knowledge of themselves so I think there's an encouragement for firms to come together where there's no competitive considerations and I don't think that this is a competitive consideration to form common languages common ways of describing their businesses and where interpretations can be shared then that's a good thing if they have the same business and the same risks they should be applying the same regulation that principle is pretty well established so no I think quite the opposite it's a real pull for encouragement from the regulators to say yes we'd love to see the industry come together and do this and hopefully the quid pro quo is that we get regulators who start publishing content in machine readable initially and eventually machine executable formats that we can consume as the other part of the equation I think really the key here is to try and visualise this as a... we're trying to create a systemic efficiency in our industry as a whole and that's really the fundamental element of this and we don't have that systemic efficiency so how do you do that that's really the crux of it and I think it's not an efficiency that's independent to the regulators the regulators are a part of that and I think the regulators see the value proposition and I know Sarah's been talking to people in the Bank of England etc a lot of interest and I think it's a lot of people like to say the regulators aren't support or won't support but I personally feel that the industry needs to work together and bring things to them that they can support they're not going to support something that is not there or is not well formed so I think it's literally two sides coming together Sure Rob It's a good question like I said it's a timing thing because as a lot of you will be aware regulations have grown in complexity over time and you need I think a bit of a kick up the bar to put it bluntly in terms of that complexity level to say hang on this is just a pain now to do we need to do something that's one dimension the other dimension is I think individual firms didn't have a channel to tap into to say how do we kind of pull this together and work together in a consistent framework and again as we mentioned working with Finos and the various people around here we're starting to get that framework at the industry level to start to channel the efforts in and do this as a collaborative thing so I think the combination of those two things really are starting to and that's why we've been emphasising the timing aspect that this is the right time let's strike out on this now on the parameters I think since the financial crisis I say it's only 13 years ago but it's a relatively short time and since then firms have got to this point of thinking it's becoming intractable but you've also had a lot of reg tech and fintech activity and that's where the crunch point is coming so I think that's the aspect but equally there's a limited time window so if there's not solutions fast then there'll be an opportunity missed it's an exciting time definitely well thank you everyone thank you very much thank you