Goldman, HSBC join forces with other banks on client disclosures

The logo for Goldman Sachs is seen on the trading floor at the New York Stock Exchange (NYSE) in New York City

The logo for Goldman Sachs is seen on the trading floor at the New York Stock Exchange (NYSE) in New York City, New York, U.S., November 17, 2021. REUTERS/Andrew Kelly/File Photo Acquire Licensing Rights

  • Five banks aim to apply share rules more consistently
  • Interpretations can leave positions under-reported

LONDON, Sept 25 (Reuters) – Goldman Sachs and HSBC (HSBA.L) are among a group of five banks adopting a common global approach to disclosing clients’ stock positions, a move which participants say could help cut costs and bolster transparency.

The group, which also includes Barclays (BARC.L), BNP Paribas (BNPP.PA) and one other bank, is working on a tool to minimise the risks of under-reporting, particularly when investors make so-called short bets or build stakes using derivatives, two sources told Reuters.

Regulators require investors to report the securities they hold when certain thresholds are breached, which requires complex, time-consuming analysis of the rules. If there is room for interpretation, this can lead to missteps and penalties.

Banks have been investing in so-called RegTech to cut the costs of complying with such rules through automation.

Now the group of five banks, working with RegTech specialist Droit, is looking to streamline efforts and further lower costs.

Goldman Sachs (GS.N) Global Head of Position Regulatory Reporting, Pete Chisholm, told Reuters that the initiative, called Endoxa, is the first bank-led consortium to tackle global rules on disclosures reporting,

“This is about whether all the banks across the world understand the rules exactly the same,” Chisholm said, adding there was “a risk that the market data the public relies on could be inaccurate because of the lack of commonality”.

BNP Paribas Global Head of Financial Markets Compliance Kara Lemont said in a statement the scheme should reassure regulators and legislators that rules were being applied consistently.

Spokespeople for Barclays and HSBC said the banks are participating in the consortium, but declined further comment.

The banks will work with Droit and a law firm to write a common digital machine-readable code that consortium members can implement to ensure consistent compliance, said one source, who declined to be named.

Endoxa members hope other banks will join over time, further harmonising how reporting rules are applied, Chisholm said.

“Retail investors expect that every bank making these disclosures is doing so on the same basis. This is a way of ensuring everyone plays by the same rules,” he said.


Investors have in some recent cases amassed large stakes in publicly-traded companies that, while within the rules, have taken other market participants by surprise.

Although Endoxa’s members remain free to help clients to build positions confidentially, the consortium will work with lawyers and regulators to agree a precise interpretation of the rules around disclosures, the second source told Reuters.

“We believe this partnership can be extended to many issues the industry is facing. This will ultimately reduce risk and make organisations safer,” said Droit founder and Chief Executive Brock Arnason.

However, Mayra Rodriguez Valladares, a financial risk consultant at MRV Associates who trains bankers and regulators, said it may be inappropriate for banks to club together to decide how to interpret rules, adding that regulators should look closely at such moves.

Reporting by Sinead Cruise, additional reporting by Elizabeth Howcroft, editing by Alexander Smith

Our Standards: The Thomson Reuters Trust Principles.

Acquire Licensing Rights, opens new tab

Reports on the intersection of finance and technology, including cryptocurrencies, NFTs, virtual worlds and the money driving “Web3”.