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Collaboration is Key to Resolving Data Issues Raised by Regulation

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Financial institutions must collaborate to meet incoming regulatory requirements that challenge enterprise data management (EDM), according to a panel of industry experts assessing the impact of regulations on data management at today’s A-Team Group Data Management for Risk, Analytics and Valuations Conference in London.

Chairing the panel, Reference Data Review set the scene of incoming regulations requiring data intensive reporting against a backdrop of emerging data standards and evolving market infrastructure.

Commenting on these issues, the panellists concurred that collaboration was required at a basic level, without giving away unique selling points, to meet regulatory requirements. They also agreed that technology abounds to fulfil the task, but described the need for innovation and board level understanding as the task of meeting regulation is both complex and demanding on staffing resources.

Matthew Cox, managing director of BNY Mellon, said: “When it comes to meeting regulations we have to take the competition out of the equation and work together. This will benefit us and our clients.” Similarly, Irving Henry, director of prudential, risk & oversight at the British Bankers’ Association (BBA), said: “It would be helpful if the industry worked together, that way we will get to the endgame more quickly.”

Considering the regulators’ endgame, Henry said financial stability has to be at the top of the agenda, leading to industry requirements for real time data management. He also noted concerns around operational risk and capital requirements, but warned: “We need to look beyond what we see or read as regulators are looking far beyond where we are now.”

Commenting on the conundrum of many regulations with different interpretations, the panel agreed that this puts pressure on infrastructure, requiring firms to consider what they need to change, such as asset trees and identities, and develop data solutions that support new regulations with different meanings.

But at the heart of the problem, Cox believes all regulations will come back to data content and reporting. “We need to understand what data will be needed to meet regulations and we need to be able to pull data out of systems in real time to deliver data to whoever needs it. This will be very important.”

Selwyn Blair-Ford, global head of regulatory policy at FRSGlobal, suggested a top-down approach to developing solutions that will deliver required data and reports, but added: “Increases in capital and liquidity, and reporting and stress testing to meet regulatory requirements are concepts that were not on the table three years ago. If there is any low hanging fruit it is individual to each firm depending on how close the firm is to an ideal reporting picture.”

Looking at the role of market data vendors in achieving regulatory compliance, Cox said: “The basis of real time technology is there, but the key is to take a step back and consider how vendors can get market data into organisations as quickly as possible.”

Blair-Ford agreed, saying: “There are good systems, but the content is not always there. Coverage gaps are as important and quality is very important. There are also many issues around the legal entity identifier. We need to innovate if we are to avoid building a monster.”

While the ideal solution for data standards would be a single legal entity identifier (LEIs), the panel agreed on the possibility of many LEIs emerging around the world, but returned to the need to move forward collaboratively and inclusively to consider the issues raised by multiple LEIs.

Asked by the chair to outline their concerns for the coming year, the panel said technology was not a problem, but noted the need to develop quick, reliable and meaningful analysis and reporting, as well as to secure board level understanding of data management and commitment to supply enough resources to solve reporting issues.

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