Tag Archives: LEI

Seven data wins: critical steps for banking with seamless reference data

Posted on by

Data has historically been considered as simply a by-product of business systems. At financial institutions and at global banks in particular, the approach to data, and especially reference data, has largely been on how to make it work, but not necessarily on how to make it right.

Reference data, whether it’s legal entity data, instrument data, pricing, corporate actions or standing settlement instructions (SSIs), has become mission-critical for banks. It underpins almost any process or activity in the core areas of accounting, trading and risk management. It is also essential for auditing and reporting, as well as ensuring compliance and transparency.

Challenges including intersystem connectivity, outdated distribution methods and a diversity of product reference data sets, make it extremely difficult for banks to optimize their reference data without adequate data management software.

This is why a growing number of banks are looking to centralize the management of their reference data eliminating organizational and technological silos to realize seamless integration of reference data.

However, a high proportion of data management initiatives can fail because banks have underestimated the scale and complexity of the challenge and adopt a technology-led approach as opposed to addressing the program as a business-led initiative. Without the buy-in of key sponsors across the breadth of the institution, a sub-optimal outcome is inevitable.

With 25 years’ experience on the banking frontline, Asset Control’s Managing Director for Global Markets, Paolo Mittiga, will be writing a series of blogs examining in detail the seven critical steps to optimizing a reference data management change project:

1. Engage business, prove the business case and use specialized resources

2. Establish data governance with clear responsibilities and accountabilities

3. Create vision, ensure it is socialized and sold to the business and data governance

4. Establish team, clear accountabilities and define the program office

5. Create architecture, decide buy vs. build and create roadmap

6. Establish a clear partnership with vendor

7. Ensure execution

These steps are based on Paolo’s real-world experiences in successfully delivering firm-wide data management initiatives at global banks. He has learnt firsthand the success that sticking to them can bring.

Paolo will therefore provide a practical guide to optimising a data management delivery based on these ‘seven data wins’ and demonstrate how large banks can improve data quality, service levels and technology management.

LEI – Let’s execute it (well)

Posted on by

LEI, and variations thereof, have been discussed and debated across the industry for many years. It’s now time for the industry to get moving and take the proposed standards from the ivory towers of Brussels and board meeting agendas across the globe to an executable standard that will in practical terms help the industry get a better handle on counterparty risk.

The good news is that the Financial Stability Board (FSB) has already committed to this by assembling an LEI Industry Advisory Panel. The even better news is that the FSB has included within this group a broader pool of market participants so that operational, data management and security, funding and implementation experts will be joining regulation and compliance professionals to ensure the most effective and efficient LEI solution is established. At Asset Control we find the broad remit of the Advisory Panel extremely encouraging as we believe the need to involve those already fighting the daily battle to understand counterparty risk is vital for LEI to have a shot at being successful.

The number of factors the Advisory Panel must consider when setting the standards, implementation timescales and measurement methodologies could be overwhelming.  A clear and consistent framework that covers the practical implications across the whole investment management transaction lifecycle is required. Remembering the law of unintended consequences will also be key – for example, analysing how might the proposed standards effect commissions, soft dollar reporting or omnibus account structures to name just a few…?

It’s clear there is a pressing need to get LEI right, if not it will simply become just another number for the industry to contend with. The FSB and the Advisory Panel have given themselves the best possible chances of doing so by calling on expertise from a broad range of industry professionals. It must ensure all of the above areas are considered appropriately and in combination with one another to stay on the right track.

We look forward to the workshop in March to learn more about the Advisory Panel’s progress in securing the future of what has become a fundamental industry standard.

Taking a consolidated view of counterparty risk

Posted on by

News of the huge loss as a result of unauthorized trading at UBS this week immediately impacted everyone holding positions with the firm, and  has placed the need for a single common legal entity identifier (LEI) beyond debate. For traders, their clients and regulators, an immediate,  consolidated view of counterparty risk across asset classes, desks and geographies is now a bare necessity.

LEI standards are being developed to replace the intricate patchwork of counterparties and ownership structures that currently comprise each transaction. But, introducing standards on a global basis across the financial services sector has never been easy and discussions on what the impact would be from a practical perspective continue to vex the data management industry.

Nobody yet knows what the final LEI standards will look like and how they will be implemented in practice. One thing that is certain however, is that standardization around legal entities will create a huge data management headache for firms running off creaky proprietary systems. Firms simply cannot afford to try and accommodate the onslaught of regulatory change, of which LEI is only one, from what is, essentially, a standing start.

Indeed, LEI isn’t just another box to tick on an audit or compliance form; it goes right to the heart of a firm’s counterparty risk management and, for fear of sounding melodramatic, being able to respond rapidly is essential to minimize losses, or even ensure survival.

Getting your house in order and putting the right system in place now is essential. Markets move too quickly for firms to respond via manual processes, and spreadsheets alone will be left behind. Moreover,  If you invest in the infrastructure to spot these issues, and take appropriate action quickly, the shape, size and format of LEI won’t be a cause for concern, which leaves you able to focus on even more complex regulatory requirements that continue to cloud the horizon.