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

A-Team Insight Blogs

US Financial Reform Bill Includes Key Data Standardisation Recommendations

The recently published US Financial Reform Legislation Bill contains important data standardisation proposals including the establishment of an Office of Financial Research to monitor and collect data from across the industry. The new regulatory body would include a data centre that would be charged with doing the legwork, namely collecting, validating and maintaining all the relevant industry data. This data would then be used by the regulatory community to assess systemic risk and the threat that individual firms pose to the financial system overall.

The data centre will collect this data direct from member agencies, commercial data providers, publicly available data sources and financial entities. It will have the power to compel firms to provide the data it needs for systemic risk assessment, according to the terms of the Bill, but will look to regulatory agencies to provide this data in the first instance.

The Office of Financial Research would also have some degree of clout within the industry with regards to driving forward the goal of data standardisation across regulatory agencies. The Bill notes: “If a member agency fails to implement such regulations prior to the expiration of the three-year period following the date of publication of final regulations, the Office, in consultation with the chairperson, may implement such regulations with respect to the financial entities under the jurisdiction of the member agency.”

Possibly the most important part of the Bill with regards to data standards per se, is the proposal for the data centre to publish this data and make it publically available. “The data centre shall prepare and publish, in a manner that is easily accessible to the public – (i) a financial company reference database; (ii) a financial instrument reference database; and (iii) formats and standards for Office data, including standards for reporting financial transaction and position data to the Office,” states the Bill.

This data centre would thus become a catalyst for wider standardisation of entity and instrument data across the US market. By defining the format in which this data must be reported, it will compel firms to adopt these internally, or at least force them to cross reference their own standards with these industry wide ones.

On top of this and like the proposals enshrined in the argument for a National Institute of Finance (NIF), the Bill proposes to establish a research and analysis centre to monitor systemic risk on behalf of the wider regulatory community. To this end, it would need to evaluate stress testing procedures and investigate any potential disruptions within the market as a whole, among other duties. This data would then be reported back to Congress for relevant action to be decided upon.

This whole endeavour would be funded by a new Financial Research Fund, which would be established by the US Treasury, according to the Bill. However, there is as yet no assessment of how much this would cost to establish and maintain in the long term. We can expect to hear more details as the Bill progresses through the political system over the coming months.

As previously noted by Reference Data Review, there is some degree of concern within the industry about the US forging ahead of the rest of the world with regards to data standardisation, given the need for monitoring of systemic risk at a global level. Not everyone in the market is convinced that the regulatory community should be forcing change and there is some degree of debate about how long it would take to establish a fully functioning regulatory data hub such as the one proposed in the Bill.

The progress in the US should also feed into the debate around the European Central Bank’s (ECB) proposed utility. Regardless of the outcome, however, the very fact that data issues have made their way into the regulatory consciousness is a positive step forward for data managers hoping to get buy in to their projects across the globe.

The full reform bill is available to download here.

Related content

WEBINAR

Upcoming Webinar: The post-Brexit UK sanctions regime – how to stay safe and compliant

Date: 11 March 2021 Time: 10:00am ET / 3:00pm London / 4:00pm CET Duration: 50 minutes When the Brexit transition period came to an end on 31 December 2020, a new sanctions regime was introduced in the UK under legislation set out in the Sanctions and Anti-Money Laundering Act 2018 (aka the Sanctions Act). The...

BLOG

GLEIF LEI Search 2.0 and API Offer Customised, Automated Access to Rich LEI Data

The Global LEI Foundation (GLEIF) has responded to industry demand for customised, automated access to rich LEI data with LEI Search 2.0 and an API that allows third-party developers to automate searches and retrieve open, higher quality LEI data from within their application environments. LEI Search 2.0 expands the number of search parameters available, providing...

EVENT

RegTech Summit Virtual

The RegTech Summit Virtual is a global online event that will be held in June 2021 with an exceptional guest speaker line up of RegTech practitioners, regulators, start-ups and solution providers to collaborate and discuss innovative and effective approaches for building a better regulatory environment.

GUIDE

RegTech Suppliers Guide 2020/2021

Welcome to the second edition of A-Team Group’s RegTech Suppliers Guide, an essential aid for financial institutions sourcing innovative solutions to improve their regulatory response, and a showcase for encumbent and new RegTech vendors with offerings designed to match market demand. Available free of charge and based on an industry-wide survey, the guide provides a...