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Strategic Responses to Unrelenting Regulation

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Financial institutions continue to take a tactical rather than strategic approach to data management for multiple regulations, but change is on the way and will be discussed during a panel session on the challenges and opportunities of incoming regulation at this week’s A-Team Group Data Management Summit in London.

Panel member Peter Warms, manager of fixed income, entity, regulatory content and symbology at Bloomberg, says most financial institutions continue to take a regulation-by-regulation approach to compliance, but suggests they are learning from past mistakes, while regulators, who are not data management practitioners, continue to make mistakes. Here, by way of example, he cites the case of Markets in Financial Instruments Directive II (MiFID II), which mandates the use of ISINs as identifiers despite the fact that ISINS are not used in OTC derivatives markets covered by the regulation.

With budgets decreasing and numbers of regulations increasing, Warms says the biggest challenge to taking a strategic approach to compliance is lack of resources, a problem that could be partially solved by the potential of open standards, such as the Legal Entity Identifier (LEI) and Financial Instrument Global Identifier (FIGI).

He explains: “A transition towards embracing open standards is underway and making payments for identifiers will become outdated. Open standards like the LEI and FIGI can provide more consistent regulatory reporting, reduce the mapping and matching of identifiers, and ease the regulatory burden.”

JR Lowry, head of global exchange, EMEA at State Street, will also be on the panel dedicated to regulation at the Data Management Summit. He notes a predominantly reactive approach to rules and regulations at the moment, although he does point out pockets of strategic improvement in areas such as Know Your Customer, where utilities are helping to streamline compliance processes, and in cases where data management is designed not only to deliver compliance, but also business opportunity.

He explains: “Regulation is likely to remain a top three issue for the foreseeable future as MiFID II becomes the next big thing in Europe and asset managers become subject to regulations similar to those already imposed on other financial institutions.”

While the stream of regulation is unrelenting, Lowry suggests the use of technologies such as semantics could make it easier for financial institutions to interpret regulations and translate their requirements into sets of actions that firms need to take.

To find out more about:

  • Incoming regulation
  • Outstanding challenges
  • Changing approaches
  • Technology solutions
  • Open standards

Join the discussion at A-Team’s Data Management Summit in London on Thursday 5 May.

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