Sticking The Landing On BCBS 239
Readiness for risk stress tests may seem to lag, but data managers are making plans
![michael-shashoua-waters michael-shashoua-waters](/sites/default/files/styles/landscape_750_463/public/import/IMG/317/167317/michael-shashoua-waters.JPG.webp?h=acfe3244&itok=ceJMABf4)
The Basel Committee on Banking Supervision (BCBS) report on the progress of compliance with its BCBS 239 risk data aggregation principles, which was issued in January, includes a statement that global systemically important banks (G-SIBs) are still having difficulty with data aggregation governance, architecture and processes, according to a comparison of surveys conducted for 2013 and 2014.
The report makes recommendations about what G-SIBs and other firms should do to be better prepared for full implementation of BCBS 239 principles by 2016. Those recommendations, however, are all along the lines of instituting guidance, making management more involved, doing self-assessment and exchanging information, but falling short of concrete calls to action.
Some industry experts say there should be no half measures, if firms really want to pass the stress tests prescribed in the BCBS 239 principles.
In a recent webcast, John Eliseo, head of data modeling at Thomson Reuters, said firms must define a set of policies for risk data aggregation, and be robust that there is only one way information should flow. Any data outside of that flow won't be supported and is at the user's own risk.
"Different systems are doing different things and you have to bring the information together to do any sort of analysis on it," he said. The ideal is a system that is already integrated and connected, that "tends to just snap together like Lego." Complete information sets can be scrutinized in any way a user wants, added Eliseo.
The first step, which is one that many have not yet taken, is freeing oneself from legacy systems, according to John Bottega, principal at Data Management Advisory Services and a senior advisor and consultant to the EDM Council, a co-sponsor of the webcast.
"The first need is simplification—identifying and prioritizing what's the most important data," he said. "Start to extract that from the plethora of legacy environments."
Trying to alter a legacy systems environment is too cumbersome, as Bottega describes. "So we reverse-engineer from critical functions and critical data back to its source," he said. "This creates the methodology and approach."
Consolidating data and eliminating outmoded data management systems are concrete actions that the industry can take to better handle risk data aggregation and pass annual stress tests. Although BCBS 239 charges G-SIBs with the directive to better control information management, the BCBS itself, the architect of the principles, falls short of prescribing decisive measures. Firms are aware of the problem and evidently are devising solutions, as explained by Eliseo and Bottega, but it remains to be seen if they will succeed—and if BCBS's next year-end report will be more promising, heading into 2016.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
More on Regulation
Finra clears hurdle with CAT launch, but several others remain
Two major components of the consolidated audit trail are now in place. But wrangling over the CAT’s future continues.
Bloomberg, industry bodies push back on Cboe’s proposed OEMS rule change
Some industry bodies disagree with the options exchange’s proposal to carve its Silexx OEMS out of the SEC’s definition of an exchange facility and place it into a separate business line.
GenAI: US Fed reveals its five use cases
Internal sandbox used to assess viability and risks; coding and content generation on the agenda.
Zeros and ones: Industry contemplates T+0 as the next step
With the North American transition to T+1 settlement complete, same-day settlement could be the next goalpost set, though skeptics are many.
The IMD Wrap: Déjà vu as exchange data industry weighs its options
Max highlights some of WatersTechnology’s recent reporting on data costs and capacity issues facing the options industry, and asks, haven’t we seen this before somewhere?
FRTB data quality issues persist amid shifting implementation dates
Banks are finding market and reference data challenges posed by the FRTB’s standardized model tricky, compounded by uncertainty over when the regulation will take effect.
Cboe pushes rule change to make way for proprietary Opra alternatives
As US options data has grown in volume and cost, Cboe says changing the public feed's governing document would make way for more competition from private alternatives, including its Cboe One Options Feed, launched in 2023.
Regulators urged to promote cyber security investment
Public interest in stopping cyber attacks that could trigger bank runs, says Bundesbank researcher