Goldman and HSBC join forces with other banks on client disclosures. Five banks, including Goldman Sachs and HSBC (HSBA.L), have agreed to establish a uniform global standard for revealing customers’ stock holdings. Participants in the group believe the move would increase openness and save costs.

According to two individuals who spoke to Reuters, the group—which also includes Barclays (BARC.L), BNP Paribas (BNPP.PA), and one other bank—is developing a mechanism to reduce the dangers of under-reporting, particularly when investors make so-called short bets or increase their positions via derivatives.

When certain thresholds are crossed, regulators compel investors to register their securities, necessitating a sophisticated and time-consuming review of the regulations. There may be errors and fines if there is an opportunity for interpretation.

Banks have been investing in “RegTech” to reduce the expenses associated with following such regulations through automation.

The five banks are now attempting to simplify processes and cut costs while collaborating with RegTech expert Droit.

Pete Chisholm, Global Head of Position Regulatory Reporting at Goldman Sachs (GS.N), told Reuters that Endoxa is the first bank-led consortia to address international regulations on disclosure reporting.

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

According to Kara Lemont, Global Head of Financial Markets Compliance at BNP Paribas, the plan should ensure that lawmakers and regulators follow the law strictly.

Barclays and HSBC spokespeople confirmed that the banks are a part of the group but would not elaborate.

According to a source who wished to remain anonymous, the banks would collaborate with Droit and a legal firm to create a standard digital machine-readable code that consortium members may use to assure uniform compliance.

According to Chisholm, members of Endoxa expect that other banks may join over time, further harmonizing how reporting regulations are enforced.

Retail investors anticipate that all banks disclosing this information will do so equally. He said this would guarantee that everyone abides by the same set of regulations.

SURPRISING STAKES

In several recent instances, investors have accumulated sizable interests in publicly listed corporations that, although legal, caught other market players off guard.

Even though Endoxa’s members are still free to assist clients in developing private positions, the consortium will work with attorneys and regulators to come to an exact understanding of the regulations governing disclosures; the second person told Reuters.

“We think this relationship can be expanded to address many of the sector’s problems. Ultimately, this will lower risk and make organizations safer, according to Brock Arnason, founder and CEO of Droit.

According to Mayra Rodriguez Valladares, a financial risk expert at MRV Associates who educates bankers and regulators, it may not be acceptable for banks to band together to decide how to interpret laws. She added that regulators should constantly monitor such actions.