Managing Risk special report

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Risk Resolutions

No matter if you attend a financial information event in Tokyo, London or New York, the key message from market participants is pretty much the same at the moment: firms are under growing pressure from regulators and need more and better integrated data to mitigate risk.

But regulators are also under pressure to take action. In the US, the financial reform bill, passed in the Senate Banking Committee and introduced as a bill in the US Senate in March, proposes setting up a data and analysis centre, the Office of Financial Research (OFR). The concept of this type of reference data utility has been highlighted as essential for monitoring systemic risk. Yet, in April, US senator Richard Shelby held a speech where he dismissed the introduction of OFR as costly and too powerful.

The question now is if Shelby is correct to raise these concerns. The introduction of a utility would create a structural change in the industry, potentially moving some of the basic reference data collection and distribution role from data vendors to a government- run facility. Is this the best way for the market to manage risk and the problems of inadequate data and lack of standardization?

These types of discussions are not only happening in the US. Regulators all over the world are assessing ways to introduce changes that will help mitigate systemic risk and prevent future crises. For the reference data industry, the growing pressure means increased focus on ensuring data is accurate and easily accessible, and in this Managing Risk Special Report, which includes comments from industry experts and a news review, we hope to provide readers with an insight into how this can be done.

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