Data management and the demand for clean data ‘underpins’ much incoming regulatory reform to the financial services sector, an IT vendor has said.
Neill Vanlint, managing director, client operations, EMEA & Asia at GoldenSource, said that the need for data transparency and data integrity is at the heart of initiatives such as Solvency II and Basel III.
“Most risk management legislation is rooted in clean data – it usually takes a while before a new risk initiative can start delivering value from any calculations as first the data needs to be tidied up.”
“So to some extent, data management solutions are following on the heels of investment in risk as the realisation dawns upon institutions that their risk calculations are only as good as the quality of the data going into them. It’s the original rising tide that is lifting a lot of boats at the moment,” he explained.
Legal entity identifiers (LEI) are currently a talking point for the data management and reference data sectors – a recent study by the International Organisation of Securities Commissions (IOSCO) and the Committee on Payments and Settlement Systems (CPSS) described LEIs “as an essential tool” in the aggregation of data surrounding over-the-counter (OTC) derivatives.
Mr Vanlint re-affirmed the research saying that LEIs are a precursor to the clearing of OTCs in a central repository.
“Without LEIs in place, it will be difficult for participants to recognise who the various parties are trading via that central exchange,” he explained.
However, the implementation of the LEI process should be more of a burden for regulators and financial institutions rather than vendors.
“From a product point of view, we’ve been dealing with the symptom that there are not any LEIs for a long time. Our system cross references LEIs already and to some extent we are providing an interim solution inside an institution that the regulators are in a position to solve at the macro level in the market place. Cross referencing identifiers of all kinds is a necessary evil that historically we as a data management provider have had to deal with as a pre-cursor to matching and scrubbing,” explained the GoldenSource representative.
Mr Vanlint also said the increasing debate surrounding data management at Sibos is evidence of its growing importance to the financial services industry.
“Typically Sibos is all about payments and regulation such as SEPA, but there is increasingly a great deal of discussion around data quality. The core processes of the payments world are bleeding into the data world and each Sibos I go to I see more air time devoted to this data discussion.”