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Rumours and Rumblings

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Once again, the reference data utility was the talk of last night’s EDM Council roundtable event, but more interesting than the discussions on the stage, were the rumours being discussed amongst attendees. For one, there seemed to be a general consensus that it was only a matter of time before the US government announces the Depository Trust & Clearing Corporation (DTCC) as the operator of the data collection agency underlying the Office of Financial Research.

Now, this is not a new idea. Back when the DTCC bought Avox in July, Reference Data Review noted the potential for the combined data repository and entity data vendor to act as a reference data utility. However, the overwhelming conviction of many of the attendees to last night’s event highlight the increased likelihood of this turn of events. After all, as one attendee put it, the DTCC has “bought itself credibility in the European markets” via the acquisition of Avox and thus could pitch for a global or European mandate.

If DTCC was entering the market without a European headquartered outfit, it might have had more of a time convincing European politicians and regulators of the benefits of its offering (national prejudices are alive and well). One panellist suggested that reference data is “not a political issue”, but I’d suggest that a US-based utility would raise concerns at the political level if it didn’t have a distinctly European angle of some sort (for proof just look at the decisions behind the launch of many recent European flavoured clearing counterparties).

Should the Avox identifiers be adopted as industry standard, however, what will happen to Swift’s Bank Identifier Code (BIC) initiative? One attendee suggested the initiative would be doomed to failure as a result, but only time will tell.

With regards to the European political angle, it seems the European Central Bank (ECB) has been pushing the idea of a data utility at the European regulator level with a view to supporting the work of the incoming European Systemic Risk Board (ESRB). The idea is to get a European data focused directive in place to lay the groundwork for the establishment of a utility on European soil (exactly where will likely involve a great deal of debate). However, the status of these talks is unknown at present – some parties suggest they are near to announcing the creation of such a directive, but this has not been confirmed. There is also a rumour that next week’s Sibos may be used as a platform to announce this news, which would certainly make for an exciting event in terms of pushing reference data higher up the agenda.

Two blogs in the space of two days indicates how much I’m thinking about the subject of a utility, but also reflects the feedback I’m hearing from the market. If you’re all talking about it, then I feel duty bound to reciprocate.

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