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The Season for (Social) Networking?

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Social networking websites have proved to be the journalist’s stock barometer this year in terms of measuring industry or consumer appetite for anything from the taste of Marmite to political opinion. The creation of a Facebook group in opposition to a certain political decision, or for that matter, celebrity happening, is taken as a straw poll of public sentiment. Not surprising then, that the creation of a chief data officer (CDO) group on business networking site LinkedIn in March this year can be read as proof that CDOs are not only increasing in number, they are also working together to convince the industry of the importance of data.

Although the CDO group only has 62 members at the moment (from across a broad spectrum of industries, rather than just the financial services sector), it is a promising start. Also encouraging is the result of our December reader poll, which indicates that 50% of you have a CDO already in place. Perhaps a slightly more scientific and, hopefully, accurate picture of the rising profile of data management issues within the market. It seems that reference data issues are rising up the industry agenda as a result of risk management and regulatory considerations. Firms need to get a better handle on their instrument and counterparty data in order to accurately measure risk exposure, for example, and this seems to be driving how much of a priority firms place on the data function. There has previously been a lot of talk about the increase in the number of CDOs in the market, but not much evidence to support this notion. But with half of you with a CDO already in place and 17% planning to add one to your management team soon, the future is looking brighter for data. Last month’s poll indicated that times are tough for data management teams out there, with the majority facing either a moratorium on hiring new staff or job cuts. Despite the increased market volatility and its knock on impact on data volumes, most data managers are being forced to make do with their current staffing resources. But it seems that CDOs are not the casualties in these cost cutting exercises. Of course, not everyone out there will have a CDO in place any time soon: 33% of respondents indicated that their firms have no plans to add a senior management team member focused on data in the near future. Perhaps these firms will push the data management challenge to their technology teams or their risk or compliance groups instead in order to meet the requirements of the new market order? Regardless, data management is not something that firms will be able to avoid talking about in 2010. Whether it is the need to gather together risk related data for liquidity or capital management stress testing, the change to the new options symbology or the continued push towards XBRL data tagging for regulatory reporting in the US, data discussions will be driven forward by the regulatory and risk management agenda. Market infrastructures such as Swift are also seemingly aware of the data challenge and taking a more definitive stance on their position in the space. This month’s cover story on the decision by Swift to extend its reach into the area of business entity identification is a case in point. So too are the much discussed proposals by the European Central Bank (ECB) to act as a catalyst in establishing a reference data utility – a project that may or may not be suitable for Swift involvement (watch this space…). It has certainly been a tough year for most in the financial services community, but it seems that 2010 may hold many opportunities for the data management community to get its voice heard. Roll on New Year…

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