In response to the Federal Reserve’s 2021 updates to the FR 2052a report, an international financial institution faced the challenge of enhancing its quantitative funding and liquidity monitoring framework. The institution needed to upgrade its reporting system to meet the 6G requirements, ensuring compliance with increased data granularity and reporting frequency. This case study details Arrayo’s key role in the implementation of an automated solution that streamlined the reporting process and aligned with new regulatory standards.

Challenge

The Company – An international financial institution with a diverse portfolio including Investment Banking, Retail Banking, and Private Banking operations across multiple countries.

The Challenge – In 2021, the Federal Reserve Bank (FRB) announced the 6G updates to the FR 2052a report, aiming to enhance the quantitative funding and liquidity monitoring framework. These updates required the institution to collect more granular data, report more frequently, and align with international standards. Given the complexity and scope of the changes, the institution sought assistance to ensure compliance and to upgrade their existing FR 2052a reporting processes.

The Goal – The primary goal was to upgrade the existing FR 2052a reporting system to meet the 6G requirements. This involved creating a robust, automated solution capable of handling the increased data granularity, frequency of reporting, and aligning with the new standards, all while minimizing manual intervention.

Delivery

A combination of Waterfall and Agile methodologies was utilized to deliver the required automated IT solution. The project phases included:

• Project Team Formation and Scoping:
  • Establishing the project team and defining the project scope.
  • Creating the Business Requirements Document (BRD) to outline the specific requirements of the 6G updates.
• Data Acquisition:
  • Identifying data sources for required Trades, Balances, and Reference Datasets.
  • Engaging with various departments (Treasury, Financial Accounting, etc.) to ensure comprehensive data collection.
• Data Harmonization:
  • Creating a detailed inventory of data attributes for all source feeds.
  • Identifying attributes necessary for the 6G report and ensuring data consistency across sources.
• Functional Specifications:
  • Documenting the enrichments and calculations needed for the 6G report.
  • Designing Process flows, Logical data models, Enrichment logic, Manual uploads, and Data feed specifications and layouts.
• Development and Testing:
  • Building the new reporting system with automated data collection and processing capabilities.
  • Conducting multiple testing iterations to ensure accuracy and compliance with the 6G requirements.
  • Engaging stakeholders in User Acceptance Testing (UAT) to validate the system’s functionality.
• Implementation and Go-Live:
  • Rolling out the upgraded system in a controlled manner.
  • Providing training and support to ensure smooth transition and adoption by the business.

Challenges encountered throughout the project included:

• Defining Roles and Responsibilities:
  • Clear delineation of roles and responsibilities among Treasury, Financial Accounting, Regulatory Reporting, and Finance.
  • Establishing project ownership and steering processes from the outset.
• Project Scope and Requirements:
  • Managing frequent changes in the Fed requirements to avoid discrepancies and confusion among project team members.
  • Ensuring alignment of project deliverables with the updated 6G standards.
• Testing Approach:
  • Addressing the broad scope through multiple testing iterations.
  • Developing a systematic testing methodology to ensure stakeholder agreement and comprehensive coverage.

Value

The upgraded 6G solution successfully collects quantitative information on selected assets, liabilities, funding activities, and contingent liabilities on a consolidated basis and by material entity subsidiary. It enables the institution to submit the consolidated data in compliance with the updated Fed requirements.

This comprehensive upgrade ensures the institution remains compliant with regulatory standards and improves its overall liquidity risk management framework.