There are going to be a slew of upcoming regulations post credit-crunch and industry collaboration will be essential to address data management processes needed to comply, according to a panel of industry practitioners at FIMA. But progress to date has been slow, and industry bodies and participants are not talking to each other enough to progress the issues.
As audience member Mike Bennett highlighted, “Regulators are only set up to deal with management of assets, but not in the governance of IT assets.” He suggested that if regulators could broaden their reach and force firms to tackle issues that were in their longer term interest, which are difficult to prove a business case for short term, it would give the industry the impetus it needs to fix certain issues.
One of the key issues needing fixing, according to the panel, is symbology. According to Paul Booth of Citi Investment Research, “We spend enormous amounts in this area, with huge duplication of efforts. We have not got it right. But it’s essential to address critical lapses in regulatory compliance.” Again, part of the problem is the focus on tactical issues being fixed, but no-one then taking the time to step back and fix the originating problem.
It was also suggested that you don’t need an external provider to assign numbers, but internally you can build your own identifier with the securities’ intrinsic attributes.
But given the backdrop of market turbulence and likelihood of new regulations coming down the pipe, there was disappointingly little discussion of regulations beyond MiFID or the implications beyond symbology.