Why global institutions collaborate to find an industry solution to an industry problem: shareholding disclosure
Shareholding disclosure seems simple, just a percentage calculation. But as experts at our recent “Power of Consensus” event in London explained, “the devil is in the detail.” This complexity has sparked an industry-wide shift toward collaboration, with leading financial institutions forming the Endoxa consortium to tackle shared regulatory challenges.
Decoding Complexity Through Collaboration
On the surface, shareholding disclosure seems to be just “dividing one number by another and working out if you’ve crossed a percentage threshold?” Well, not quite. For global institutions with worldwide subsidiaries, this involves navigating millions of data points and vaguely defined rules across multiple jurisdictions.
The formation of Endoxa in 2023, a consortium of six banks, including Barclays, BNP Paribas, Goldman Sachs, and HSBC, signals a paradigm shift. Rather than each firm independently solving identical problems, six institutions now collaborate based on a powerful principle reflected in their name: the opinions of the many are stronger than the opinion of an individual.
An Industry-Wide Challenge
Shareholding disclosure requirements boil down to four questions: what, how, when, and where to report. Yet for large financial institutions, answering these seemingly simple questions generates a raft of further questions, creating significant risk and cost without standardized approaches.
The Endoxa model addresses this through structured consensus-building:
- Prioritize: Identify common challenges like new regulations or high-volume filing requirements
- Analyze: Translate regulatory text into clear logic models, using Droit’s Adept Platform
- Debate and agree: Reach consensus on remaining areas of ambiguity by inviting member banks to contribute their own understanding
- Seek legal or regulatory clarification: engage external counsel or approach regulators directly when consensus is not reached, to gain the necessary clarification
This process has already addressed over 100 consensus topics across more than a dozen regulations, giving members confidence that their approaches align with industry peers.
Technology and Transparency
Droit’s Position Reporting product “breaks the black box” of compliance, visualizing decision-making processes in structured, understandable ways. The platform’s most critical feature is traceability; every decision includes a complete audit trail that links back to its original sources, such as regulatory text, legal memos, or consortium consensus documents.
This transparency proves invaluable when facing questions from regulators, auditors, or clients, providing clear substantiation for decisions. The approach has even sparked discussions about showing regulators “what’s possible,” potentially inspiring them to digitize their own rules and remove ambiguity at the source.
Consensus is more relevant than ever before
After nearly a decade of stability, regulatory change in shareholding disclosure is rapidly accelerating. New rules are emerging and evolving from Australia, Japan, South Korea, and the EU, while uncertainty surrounds key regulations in the US and UK.
With regulators expecting quick industry adaptation, a robust data strategy becomes crucial. Strong data foundations allow firms to implement new rule solutions much faster. In this environment, the consensus model ensures firms are prepared for “day one” of any new regulation. By working closely with the world’s leading data vendors, Droit can help you ensure you have the right data to submit your disclosures with confidence every time.
Looking Ahead
The success in shareholding disclosure opens doors for collaboration in other complex areas. Panellists identified large option position reporting, SRD2, trade and transaction reporting, client assets, and tax reporting as ripe for consensus-driven approaches.
The driving force was captured perfectly in a closing panel thought: “Less regulation does not necessarily translate into less ambiguity.” Even with fewer rules, unclear guidance leaves industries without direction. In this landscape, consensus becomes a powerful tool not just for compliance, but for steering the entire industry forward together.