Regulatory Concerns For 2013

Reporting in this issue of Inside Reference Data points the way to what the industry will have to do to correctly manage data as numerous new regulations take effect, or get close enough that the industry must get ready.

In our lead story, London-based HSBC Securities Services data executive Chris Johnson identifies multiple codes and types of data needed for Solvency II, Fatca and central counterparty clearing requirements set under the Dodd-Frank Act and European Market Infrastructure Regulation (EMIR). Johnson shows leadership by saying that financial institutions have to ask data vendors to provide the data needed for Fatca compliance. This makes sense - providers need to see demand and the potential data customers should want competition for their business, from more than one provider offering the necessary data services.

For Fatca (the Foreign Account Tax Compliance Act), just 12 months remain to solidify necessary intergovernmental agreements (IGAs) between the US, the origin of Fatca regulation, and other countries. Firms also have to sort out multiple coding indexes for Standard Industrial Classification (SIC) codes used to classify entities that have to or do not have to report under Fatca. Awareness of Fatca requirements is increasing but major firms face a tall order of identifying and reporting accounts that are covered, Jon Asprey of Trillium Software told IRD.

So, as Johnson said, the demand is certainly there for Fatca services. But the industry and its providers may still be either in the dark about what has to be done, or awaiting clarifications from regulators and standards bodies so they know what to do.

On another front, all the types of data that must be collected and managed for US firms' regulatory compliance with other rules such as Basel III and CFTC Part 45, must all be linked, says Mike Atkin of the EDM Council. Aside from just indicating interest in the data they will need, industry firms also have to be able to link data enterprise-wide to obtain accuracy and high quality in the data. The stated purpose of many of the new regulations coming out of the Dodd-Frank Act is to prevent a recurrence of not knowing where all the relevant data about securities holdings is because it hasn't been properly identified and managed. Atkin and his organization have identified and are encouraging the action that firms need to take.

In the new year, the industry will undoubtedly see further action in this range of regulatory developments, all of which will affect reference data management operations. The considerations in these pages are going to be a big part of how that will play out. So enjoy the holidays but get ready for a full plate in 2013.