DATA MANAGEMENT AND REGULATORY REFORM – WHAT’S THE HOOK?

Author: Tony Scianna, deputy head of strategy, SunGard’s capital markets business

I love music. I’m a big fan of jazz, blues and rock & roll. While I was listening to some vintage vinyl the other day, I began thinking how every great song has a powerful hook – a lyrical or musical phrase that catches your  ear, makes you start tapping your feet and stands out in the song. How does this fit into a capital markets blog? It struck me that I have been trying to catch the ear of anyone who will listen and tapping the tables with a hook of my own: Data management is one of the key initiatives that must be addressed in order to handle all of the upcoming regulatory reform.

Time and again, we’ve found that sound data management is the clear hook for 2011, 2012 and beyond. As for lyrics:

“Firms must be able to capture their data in as close to real time as possible, standardize, normalize, and cross-reference that data then have the ability to access it. Financial services firms have grown up with multiple silos, and breaking them down is a complicated, ‘daunting’ process.”

“Continue planning. Ensure that your approaches are flexible. Partner with your vendors to be sure your technology strategies are ready to tackle new challenges and reveal new opportunities. Talk to as many industry experts as possible. Participate in industry groups that are working to shape the end-state of the regulations.”

This is the crux of all the financial reform, being able to understand and report on any portion of your financial activity. This plays to regulatory reporting, financial reporting, compliance reporting, transparency, and systemic and operational risk.

Of course, it also never hurts to have some harmony in a great song. In terms of the data management challenge, several industry experts have chimed in:

Kevin McPartland, Tabb Group: “Data is what will bring transparency to the market, but the sheer magnitude of data needed to operate in financial markets today is in large part what contributed to the complexity and need for transparency in the first place.”

Larry Thompson, DTCC: “Trade reporting is the critical first step because regulators will depend on current and accurate trade information to make decisions related to other parts of Dodd-Frank, including clearing and trade execution. This will allow regulators to think about whether they want to put some restrictions on markets or certain market functions. It will also assist them in appropriately defining large block trades.”

Waters Data Management Special Report: “As a result of the economic crisis, regulators around the world are making sweeping changes, not just in relation to reporting but around how financial institutions will be expected to do business in the future.”

Surprisingly, even advice for writing a song is similar to advice for taking an enterprise-wide approach to data management. Aspiring songwriters are instructed to “Smooth the rough edges… Put all the sections of your song in the same key.” In our industry, this translates to your firm needing to standardize and normalize its data so they are all “in the same key” for regulatory reporting.

Ultimately, whether it is music to your ears or not, the industry will need to be able to capture various forms of relevant data, standardize and store that data, and have the ability to access that data 24/7. The key for addressing this challenge is to be prepared for what happens next by equipping your firm to capitalize on change now.

While you’re here…

• Learn about our data management solution StreamCore.
• Download and read the latest data management special report.