As the financial institutions prepare for the implementation of strict new EU regulatory requirements, six worlds largest banks have teamed up to simplify the compliance process using the ethereum platform. The system was initiated by the Swiss giant bank, UBS, with the help from Barclays, Credit Suisse, KBC, and Thomson Reuters, and it’s basically designed to make it possible for financial institutions such as banks to reconcile their huge data with their counterparties.

The upcoming regulatory check known as the Markets in the Financial Instruments Directive (MiFID) II is scheduled to be launched in the first week of January 2018 and all the participants would be required to have all the ‘Legal Entity Identifiers’ which include the use of special codes for each data reference.

Instead of each bank performing the checks individually, the collaboration of the six giant banks is intended to mutualize all the efforts into a possibly industry-wide reconciliation process that is managed by the Microsoft Azure cloud. Peter Stephens, the head of the UBS’s blockchain department, stated that the blockchain infrastructure is designed specifically to enable the users to save costs, without compromising their competitive advantage and will ease the regulatory demands even before they start.

The ethereum platform, which is developed over a six-month period, is designed to reconcile the identifiers that were endorsed by the Legal Entity Identifier Regulatory Oversight Committee (LEI ROC) and other systems. The reconciliation of the reference data covers the industry classifications and other crucial information provided by the European Securities and Markets Authority (ESMA).

Instead of each bank checking the data and information individually and reporting results periodically, the ethereum smart contracts will help in ensuring that there’s accuracy in the real-time allowing the users to quickly identify any anomalies in their data and reconciling them.

According to Stephens, the collaboration of the six banks only ensures the accuracy of their data; however, it can only be used as a public reference data, but not as a competitive differentiator.