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Financial Services Braced for Global Data Deluge in 2010

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The financial industry has been flooded with over 2,000 pages of regulatory documents this month including a dozen publications from European supervisory agencies, two major consultations from the Basel committee on banking supervision and over 15 pronouncements from the UK’s Financial Services Authority (FSA).

The surge of regulatory activity comes amid a torrent of speeches from politicians who are pushing through large restructuring efforts in Brussels, Washington, Tokyo and London. With the G20’s comprehensive 93 point action plan covering everything from compensation, liquidity and capital ratios, large exposures, concentration risk and recovery and resolution plans it is doubtful that any part of the global financial services supply chain will remain untouched next year.

PJ Di Giammarino, CEO of JWG, comments: “Bankers that were hoping to reach higher ground in 2010 are in for a rude awakening. Everything from their business models and suppliers, to the size of their procedure manuals and quality of their information infrastructures will be subject to scrutiny.

“Calls for transparency and control have catalysed a colossal wave of regulatory information requirements across all parts of the supply chain. The data tsunami, predicted by the chair of a Basel Standards Implementation Group at a risk conference last week, has well and truly hit. If the politicians have done the job right, regulators will now start focusing their attention on the monumental task of creating industry data standards, upgrading legacy infrastructures and ensuring that financial services firms ‘know their business’ at a far deeper and granular level.

“Bank infrastructures will subsequently be strained on many fronts in 2010 and it is difficult to pinpoint what will hurt the most. In a ‘normal’ year we could forecast the ‘league table of pain’ 12 months out. This year is an exception; the surge in regulatory documents this December has brought activity levels to an extreme for infrastructure professionals, as nobody can begin to fathom how all this change can be absorbed at once.

Di Giammarino concludes: “Simply asking for ‘information’ is not enough. Without banks and their regulators agreeing common methods of producing and receiving data, the clarity sought by these regulatory efforts will not be achieved. We are encouraged by the US House Proposals, as they have outlined procedures to share data across the FS oversight bodies in agreed formats. In the New Year JWG will continue to call for more clarity on who is accountable for the data rulebook in both the UK and EU.”

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