The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Data’s day in the sun

If nothing else, this month’s TSAM conference demonstrated that regulators are going to play an even more important role in data management than ever before. As Mike Atkin, managing director of the EDM Council, told delegates, the regulatory community is now actively taking an interest in how to encourage greater standards adoption in the area of data management.

The EDM Council itself has been leading the discussions with the regulators over the last few months, including the European Central Bank (ECB), the US Federal Reserve and the Securities and Exchange Commission (SEC), according to Atkin. The ECB is even contemplating getting involved in providing a repository for data identifiers for the market in the future (see our cover story on TSAM for details). Moreover, John Bottega’s appointment as chief data officer of the New York Fed is further evidence that the regulators are well aware of the importance of data management within their own walls. The hiring of ex-Citi data management champion Bottega signals the central bank’s understanding that even its own internal data issues need to be given the correct level of scrutiny. However, even though the regulatory community is focusing on data management and data quality in the background, regulatory compliance is still not having a significant impact on institutions’ spending in this area, according our latest reader poll. Rather, operational risk and the desire for greater cost savings are the key issues driving financial institutions to invest in their data management infrastructure this year. This result is unsurprising really, given the focus on doing ‘more for less’ in the current financial climate, but it is surprising that not a single respondent to the Reference Data Review poll highlighted regulation and compliance as a driver for investment in data management. The poll indicates that despite the recent increase in regulatory scrutiny and predicted increase in compliance spend, regulation and compliance are not yet significantly driving spending for data management projects. Also out of the spotlight were reputational risk and M&A, each failing to garner any votes as priorities driving data spend. Operational risk topped the list with 50% of the vote, closely followed by cost savings at 33%. The remaining 17% was attributed to the ‘other’ category, which one can only assume means factors such as improvements to client servicing and the desire to improve data quality. The obvious reason for this result is that the reduction of operational risk and cost are easier wins when championing the issue of data management within an institution. Senior management’s strict scrutiny of ROI for projects in the current environment means data management projects must provide tangible metrics such as cost savings to get the green light. The reduction in headcount over the last six months across institutions also means that they have to find alternatives to people to throw at the problem and automation and data centralisation are apparent solutions. The results of the poll confirm that risk is very much a concern in the market, as noted by a number of recent research reports into the area of data management (see last month’s issue of Reference Data Review for a rundown of some of them). But it is surprising that regulation is not a key concern, despite the high profile that regulators are maintaining at the moment. Perhaps the results will tell a different story in six months’ time, once the regulatory ball gets rolling and the market is faced with the prospect of coping with increasingly strict oversight policies. As our other lead story this month indicates, risk and regulation are on the radar of most big firms. BarCap’s Rakesh Nigam reckons it’s only a matter of time before this trickles down to the rest of the industry, especially with the advent of stress testing. And judging by the state of the market, it won’t be an easy transition for all.

Related content

WEBINAR

Recorded Webinar: The evolution of market surveillance across sell-side and buy-side firms

Market surveillance is crucial, and in many cases a regulatory requirement, to ensuring orderly securities markets and sustaining confidence in trading. It can be breached and has become increasingly complex in the wake of the Covid pandemic, Brexit, and the emergence of new asset classes. This webinar will review the extent of market abuse in...

BLOG

Surveillance 2.0 – Turn Up the Signal, Wipe Out the Noise

By Joseph Schifano, Global Head of Regulatory Affairs, Eventus Systems. Trade surveillance is a complex discipline, dependent on the processing and filtering of masses of data. Its mandate is constantly increasing too, with the relentless iterations of regulatory and market change demanding the monitoring of more asset classes across more business lines and against an...

EVENT

RegTech Summit London

Now in its 6th year, the RegTech Summit in London explores how the European financial services industry can leverage technology to drive innovation, cut costs and support regulatory change.

GUIDE

Regulatory Data Handbook 2020/2021 – Eighth Edition

This eighth edition of A-Team Group’s Regulatory Data Handbook is a ‘must-have’ for capital markets participants during this period of unprecedented change. Available free of charge, it profiles every regulation that impacts capital markets data management practices giving you: A detailed overview of each regulation with key dates, data and data management implications, links to...