In spite of – or, indeed, maybe because of – the grim news emanating from the financial pages in recent weeks, enterprise data management practitioners have much to be optimistic about. That was at least the impression given by presenters in the Data Integration stream of the FIMA Financial Data Management Conference Wednesday afternoon.
Stream moderator Mike Atkin, chairman of the Enterprise Data Management Council, insisted that it’s “a great time for data management. If we can’t do it now, we never will. Fellow presenter Dani Newlands, product manager, data management, at Eagle Investment System, reiterated Atkin’s upbeat mood. She quoted Alan Greenspan, who in a recent hearing before Congressmen last month allegedly mused that “If we had access to better data, we might have made some different decisions.”
A sceptic might suggest that with job titles and functions like theirs, Atkin and Newlands would have every reason to be optimistic. If they’re not, then their only alternative would surely to be downright pessimistic. Indeed, if it’s ‘now or never’ for data management right now, then what was it when it was ‘now or never’ for data management five years ago, when major EDM projects finally got the kind of funding they deserved and had been denied for many years?
But these presenters’ reasoning holds some water, not least Atkin’s: as EDM Council chairman he’s been engaging in some shuttle diplomacy between regulators and central banks in Washington, D.C., New York, Boston, Toronto, London and elsewhere, urging those with the power to change things to, well, change things.
His report at FIMA on what he’s experienced was indeed encouraging. While taking pains not to apportion blame for the Great Financial Meltdown of 2008, he told the audience that many market practitioners were finally coming out of almost a denial phase wherein they were finally acknowledging the importance of the role of data management in preventing a recurrence. Moreover, he said the SEC, the FSA, the ECB and industry utilities like Swift were all on board with the basic goals of data management: namely to provide access to data that was fit for purpose, easy to integrate, and managed as a chain of supply.
In other words, while data management – admittedly no longer the forgotten stepchild of the back-office IT world – has in recent years been neglected in favour of more immediate and (heretofore) profitable activities, it now has the backing of regulators as a key element in their efforts to avoid future calamitous industry responses to the recent credit crisis.
Atkin said more regulation is inevitable. But he said he didn’t expect to see the kind of box-tick prescriptive regulation that has characterised the U.S. in recent years; rather, he anticipates a more principles-based approach with more emphasis on regulatory oversight than on practitioner compliance.
Hence his optimism.
Regulators will be looking to firms to provide a clear view of their exposure and risk. These are heavily data-dependent requirements. Past obstacles to achieving the underpinning data frameworks to achieve these objectives will be cast away but regulatory ‘encouragement’, with the threat of mandate hanging heavily in the air. If the foundations of this data management framework are right, Atkin said, then the rest can follow easily.
The rest, according to Atkin, is based on the establishment of four key essentials. First, a standard business entity identifier. Second, data attribute identifiers, or bar codes to satisfy business, legal and risk data requirements, as Atkin put it. Third, unique identifiers at instrument level, so that front office, risk management and back office symbologies are unified. And finally, classification of instruments by business, sector and so on.
With regulatory oversight imminent, Atkin said, the main challenge will be organisational alignment: in other words, knocking heads together when people get in the way. While he didn’t offer any advice on how that’s achieved, he remained optimistic: “The game is up,” he said. “It’s a full transparency requirement.” Then: “Good luck!”
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