Preparing for the demands of new regulation is like going on a diet: Imagine the 2018 go-live of MiFID 2, for example, is the deadline of swimsuit season, and your data management processes are your once-trim and firm waistline, which—like so many regulatory technology projects—has started to creep and become almost as bloated as your consulting staff budget. I prefer to weigh such challenges over a pizza and beer—the carb-laden equivalent of hiring yet another consultant to manage all the existing ones.
Of course, the first thing to remember is that you’re doing this for yourself, not for what anyone else thinks when you’re lounging by the pool. Now, technically, this is where my analogy becomes tricky, because in the financial world, you are definitely going through this process to comply with MiFID 2 and other regulations. You need to be able to adequately report a multitude of data points to regulators and be sure—on pain of serious penalties—that they’re accurate, standardized, and consistent. But ultimately, yes, you’re doing this for yourself, because regulations come and go (and generally just keep coming), but you have to be prepared for all of them, not to mention the ones that don’t exist yet. So yes, this is about you and your overall (data) health on an ongoing basis, not just for one summer or new regulation, but rather about being fit enough to handle any challenge thrown at you.
The second thing to remember is that data is your friend: Imagine data as the healthy, nutritious food that keeps us going. Just like an athlete needs more carbs than I do (so people tell me), increased volumes of sophisticated data processes and analyses typically require more data. But increasing your data intake without that intense exercise to burn it off will leave you bloated and struggling to maintain peak performance. Over-consumption of even good data can be too much of a good thing, while a diet skewed to the wrong type of data may well leave you lacking essential nutrients.
And just as fitness is usually a diet or exercise issue, regulation is increasingly being recognized as a data issue, and meeting regulatory demands are acknowledged as being an issue of what data you consume, and what you do with it.
At the Asia-Pacific Financial Information Conference last week, issues of data governance and regulation were front and center of several discussions, but unlike in years gone by, the discussion has largely moved away from figuring out (or objecting to) what needs to be done, and assessing firms’ level of preparedness for (or panicking about) when it needs to be done, and how firms can achieve it in a way that ensures they aren’t just scrambling from one new requirement to the next, but actually future-proofing themselves against upcoming changes, as well as setting themselves up to get more value from their existing data from a business perspective.
One aspect of this is simply having staff and suppliers to fully understand the regulations themselves. Gone are the days when data professionals were responsible for finding which vendors had the best coverage, bullying the supplier into delivering the required number of terminals within budget, then counting who actually used them. Today’s data staff are also tasked with generating and guarding the data required for regulatory reporting, and the best of these individuals—HSBC Securities Services’ Chris Johnson, for example, who has given up much of his time to spreading the word about compliance not just within HSBC, but to all who will listen—know regulations as well as they know data itself.
Another aspect is centralizing your data so that all data assets can be managed as one, breaking down organizational siloes and other barriers that once made sense but now merely impede a firm from functioning efficiently in today’s business and regulatory environment.
Measure twice, cut once, as any carpenter will tell you. Or, to put it another way, get your data right, and accurate reporting will naturally follow.
Should regulators take a more active role when it comes to AI oversight, or leave it to the professionals? What will M&A look like in 2018?Subscribe to Weekly Wrap emails