David Blaszkowsky, senior policy advisor at the US Office of Financial Research (OFR), has challenged perceptions of data management in financial markets, saying data is not a conundrum but a business problem that can be tackled in a way that other industries have tackled problems using a rigorous and judicious approach.
Speaking at this week’s Regulatory Reform and the Data Conundrum Conference 2012, an event organised at the London Stock Exchange by the International Centre for Financial Regulation and Intellect, Blaszkowsky said: “Data management is not a conundrum. We must use data that is needed for regulation, supervision and by the industry for its own data management rationally.”
In his presentation, ‘Data, Data Standards and Financial Stability Research’, Blaszkowsky outlined the work of the OFR, which was established by the 2010 Dodd-Frank Act to support the US Financial Stability Oversight Council. The agenda is to research threats to financial stability, evaluate mitigants, address data gaps and promote data standards.
Blaszkowsky described the state of research into financial stability as “a theory without facts”, saying firm data has not kept up with needs of financial research that is required to support policy makers. This situation, he said, needs to be improved and one way to do that is to fill data gaps across the industry.
While many in the industry agree that financial data is not fit for purpose, Blaszkowsky insisted that this problem should be pursued.
“Data is crucial to research and monitoring threats to financial stability. Financial data that is fit for purpose is achievable for regulators and participants in the financial sector. The requirement is not for all data, but the right data and this is what the OFR is working towards,” he said.
Considering data as part of a supply chain process, Blaszkowsky suggested data could be subject to quality improvement, that technology could be a data enabler and that data standards could save effort while improving the usefulness of data.
“We are trying to understand through research what it is necessary to know to avoid threats to financial stability,” Blaszkowsky said. “Two of our goals are to help the Financial Stability Oversight Council access better quality data and to promote data-related best practice. The OFR organisation includes a research centre and a data centre, they are equally important. We can solve problems, but only if problems around data are solved.”
On the issue of the legal entity identifier (LEI) that is being developed under the auspices of the Financial Stability Board (FSB) with a view to stemming systemic risk, Blaszkowsky said: “We have dedicated an information standards group to focus on the LEI. The LEI is a global initiative of great value to the US. There has been tremendous involvement of the financial industry in developing the LEI and the OFR is working with regulators and the industry to recommend to government that the LEI should be implemented through the processes of the FSB. The LEI can help close data gaps and make data easier to analyse.”
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