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Object Management Group and Data Transparency Coalition Announce SMART Regulation Task Force, Invite Public and Private Sector to Participate
Task Force will Encourage Agencies to Standardize Rules and Disclosures
Needham, MA and Washington, D.C., USA – August 28, 2012 – OMG® and the Data Transparency Coalition today announced that they will jointly form the SMART Regulation Task Force to advocate the incorporation of data standards in U.S. federal regulation. The task force will encourage regulatory agencies to use electronic standardization to clarify their rules, facilitate cheaper compliance, sharpen their enforcement capabilities, and move toward greater transparency.
Both the Data Transparency Coalition and OMG bring complementary strengths to the new task force. The Coaltion will play an advocacy role, by engaging with US government agencies, Congress and global regulators to identify the high priority challenges and requirements for SMART regulation. OMG will provide its proven technology neutral standards development process, as well as expertise in data and process standards to infuse innovation into regulations' life cycle, leading to development of newer standards compliant software solutions.
The task force will identify and promote opportunities to apply industry-defined standards to regulatory text and disclosures. “SMART” stands for Standardized, Measurable, Actionable, Reliable, and Timely. Existing and future applications of SMART regulation include:
- Standardized identifiers. A range of financial regulatory agencies are expected to begin using the global Legal Entity Identifier (LEI), which will allow regulatory disclosures filed by the same entity with different agencies to be searched together.
- Standardized interchange formats. In 2006, the FDIC and other banking regulators began requiring banks to provide their call reports in the eXtensible Business Reporting Language (XBRL) rather than as plain text. The adoption of an electronic interchange format boosted accuracy from 70% to 100%, reduced preparation time from weeks to days, and allowed the FDIC’s analysts to cover more banks.
- Standardized data models. The Financial Industry Business Ontology (FIBO), currently being developed by OMG, will standardize descriptions of financial instruments so that parties to swaps and derivatives can instantly understand their exposure and regulators can track risk.
- Standardized vocabularies. If regulators drafted rules using machine-readable terms and connectors, regulated entities’ software systems could react automatically—dramatically reducing compliance costs.
In addition to its advocacy with regulatory agencies, the task force will encourage software companies to develop more tools that use industry-defined standards to assist both the agencies and their regulated entities.
“Makers and consumers of regulations must deal with ambiguous language, unnecessary complexity, scope overlaps, conflicting timelines, and a lack of measurable costs and benefits,” said Richard Mark Soley, Ph.D., Chairman & CEO of OMG. “Standardization can address these problems if the agencies, the regulated entities, and the technology industry all embrace the right standards. Our task force will try to make that happen.”
“Many regulatory agencies – especially in the financial sector – are getting serious about the need to standardize their rules and the disclosures they receive,” said Hudson Hollister, Executive Director of the Data Transparency Coalition. “But frequently I’ve found that advocates of standardization in one agency aren’t aware of parallel work in another agency. Meanwhile, Congress and the White House would like to support standardization but need better information. And the technology industry has no single source that collects and communicates new opportunities for standards-driven regulatory tools. The SMART Regulation Task Force will fill these needs.”
Participation in the Task Force will be open to members of OMG and the Data Transparency Coalition. The task force will seek input from government, regulated entities, and academia. The two organizations will define the vision and scope of the task force at a kick-off meeting on September 11, 2012, in Jacksonville, Florida. An initial draft charter can be found at www.datacoalition.org/smartregulation.
About OMG
The Object Management Group® (OMG®) is an international, open membership, not-for-profit technology standards consortium. OMG Task Forces develop enterprise integration standards for a wide range of technologies and an even wider range of industries. OMG's modeling standards enable powerful visual design, execution and maintenance of software and other processes. Visit www.omg.org for more information.
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