I noted the announcement of Google’s participation in the Commodity Futures Trading Commission’s new data standards subcommittee this month with interest. Given its potential in the financial services market in the area of data management (in the cloud) and the experience it brings to the table, it’s a surprise that steps hadn’t been taken sooner to this end. European and US-based regulators have been referencing Google in their speeches as a potential model for their standardisation endeavours for some time, after all.
Does this mean, however, that Google will (as we’ve previously suggested) make a play for one of the many data related businesses up for sale across the financial services industry? Could be.
Thomson Reuters has a few items up for sale it might be interested in, so does data utility provider SmartStream. Both would be keen for a quick sale: the data giant is keen to refocus its efforts on its “core business” and divest itself of the Kondor risk management solution set (among others); Dubai is keen to sell off SmartStream to bolster its ailing finances, post-popping of its property bubble. There are a number of other smaller (than Google, but by no means small in terms of the financial markets) vendors out there is could also snap up, if it so wished.
The benefit of buying some real estate in the capital markets sector would be in picking up experienced financial services focused individuals (and solutions) it could indoctrinate into the Google way of doing things. It shouldn’t need too much of a push in terms of brand awareness (I’m fairly sure you’d have to be living under a rock to not have heard of Google), but it might need assistance in convincing financial market participants of the security of its technology if it hopes to go down the public cloud route.
But for the purposes of the regulatory community, hosting publicly available reference data in a cloud operated by Google (as required by the requirements of the Office of Financial Research) is not too much of a stretch. Of course, that statement only pertains to the data that is to be accessible by the public. One would assume that regulators would opt for a private cloud approach to storing some of the more economically sensitive data about systemically important financial institutions (SIFIs), for example.
Regardless of its future role in the markets at large, Google will be lending its experience and voice to the regulatory debate on the subject of data standards. It will be joining the key players nominated from the industry, associations and vendor communities to thrash out some advice for the CFTC in its unique product identification efforts.
Whether all of this effort actually results in any tangible action being taken is yet to be determined. Doubtless the success (or failure) of the US regulatory community in introducing a new legal entity identification system will provide something of a portent for the instrument ID effort. Given that the big decisions on the LEI are due to be finalised mid-next month, we don’t have long to wait.