As new global regulatory reform dominated 2010, transparency, global entity identifiers, systemic risk monitoring, were among the top twenty five scenarios that became popular in the data management arena this year, according to a report issued Tuesday by the Enterprise Data Management Council, the trade group representing Wall Street’s largest data management experts.
Among the top twenty five unpopular ones: Asymetry; international business entity identifiers; data fragmentation and bespoke transactions.
As is often the case with financial legislation, it all comes down to how data is managed.
The Dodd-Frank Reform Act, coupled with growing investor demands are prompting firms to keep better tabs on the transactions they execute and process as well as the counterparties they do business with. Across the pond, European regulators are coming up with their own version of financial reform along similar lines.
If financial firms don’t exactly know what is going on in their shops they can’t measure their enterprisewide risk. And if they can’t do that, how is the government supposed to measure systemic risk. That’s now been assigned to the newly created Office of Financial Research which has to in turn, gather the data from Wall Street’s biggest firms to present its evaluation of the financial industry’s health to a higher authority- the Financial Stability Oversight Council.
But there is just one key glitch: More often than not, data is fragmented in multiple applications, in multiple business silos. That means firms have to not only ensure data is consistent but that its accurate and aggregated quickly enough to be reported to the OFR. That’s a lot easier said than done.
The new U.S. government agency has also just put out a request for proposals for an industry-led organization to identify the counterparties which trade the securities. Such information is particularly critical when it comes to the riskiest of investments – over-the-counter derivatives where legislation calls for the use of centralized clearinghouses for “standardized contracts” and storage of transactional data in repositories.There are currently dozens of identification codes – both internal and third party—which firms have to rely on. That means a lot of cross-referencing and potential for error.
Here’s the rundown on the top 25 ins and outs in data management for 2010 outlined by the EDM:
Age of Transparency
Global Entity Identifier
Supply Chain Management
OTC Derivatives Transparency
Financial Stability Oversight Council
Enterprise Data Management
European Systemic Risk Board
Concentration and Liquidity Risk
Sovereign Debt Crisis
Data as Operational Infrastructure
Science and Discipline
Office of Financial Research
Age of Asymetry
Wall Street Reform and Protection Act
International Business Entity Identifier
Financial Stability Forum
Silo Data Management
Single View of Customers
De Larosier Commission Report
Jump to Default
Data as IT Infrastructure
Art and Practice
National Institute of Finance
Global Legislative Restructure
This story has been reprinted with permission from Securities Technology Monitor.
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Corrected December 30, 2010 at 9:50AM: yes