Michael Shashoua: Critical Mass

Whether efforts to improve data quality and consistency are a reaction to regulation and standards mandates or are happening of their own volition, that work is generating value for data management at a time when the volume of data to be managed is increasing and the resources to handle it are becoming more scarce.

The legal entity identifier (LEI) drove Citi to adopt centralized systems to improve risk management, said Ari Marcus, New York-based head of entity data operations and institutional client and account technology, at the North American Financial Information Summit. Fatca and the BCBS 239 risk data aggregation principles—discussed last month in this space—could also generate value. Data aggregation and consolidation for Fatca compliance is spurring data quality improvements, said Mark Gilmartin, tax director at Barclays in London, at the same event.

As a sign of rising data volumes, Dominique Tanner, head of business development and executive director at SIX Financial Information, speaking at the Sifma Tech Expo, cited the growth of corporate actions messages processed by the vendor, from 160,000 in 2003 to 6.7 million in 2013. “If you put more and more instruments on the database, these instruments get traded on ever more listing venues due to Regulation NMS in the US and Mifid in Europe. Securities are producing more corporate actions messages,” he said.

Handling rising volumes is more than just a technology issue, said Brian Miller, senior vice president, data management at Wells Fargo Advisors in St. Louis, at the Sifma Tech Expo. Staffing and processes must also “clearly” be part of the response, he said. “Do we have the right roles in the organizations to manage the data? That can be anything from data integrity managers and data stewards to the technology people who implement those processes,” he said.

Think Different
Organizing and deploying data staff requires “thinking differently,” Miller said. “Having the ability, the courage and wherewithal to undo everything your firm grew up with allows you to free up the resources to do it the right way,” he said. One example of such an effort, given by Dilip Krishna, a director at Deloitte, is taking apart multiple data stores set up to serve different purposes, then re-investing the resulting savings in a new, consolidated method.

To support improvements in data quality, consistency, and transparency, is more drastic change needed?

As for personnel, Miller cited Wells Fargo’s distributed model. “It’s not only for data talent, but being able to use that talent within the financial services industry, which is the real challenge.”

If significant personnel and systems changes are needed to support improvements in data quality, consistency, and transparency, is more drastic change needed to get institutional support and action on data governance plans?

The answer, according to experts at the Toronto Financial Information Summit, is yes. Rares Pateanu, most recently executive director at Morgan Stanley, says that where firms may have revamped their data strategies in response to the 2008 financial crisis, the importance of being able to track holdings and transactions­—in part through reference data and identifiers like the LEI—may be getting forgotten.

Data strategy and governance initiatives require a culture of sharing that may not be valued, particularly considering the priorities of investment banking units, Pateanu added.

During a discussion covering the LEI, Pierre-Simon Rivest, senior policy advisor at Banque National du Canada, asked what would happen in the event of another major industry crisis like the global financial crisis of 2008. “How would this transparency work?” he said. “How would there be oversight to un-match transactions?”

Designing and implementing data systems and reorganizing staff is needed to derive value from data governance plans and get all-around better data management. The first step, though, may be demonstrating the value of this work to skeptical colleagues, as more and more time passes since the last crisis.