Trans-Atlantic Regulatory Storms

This month, Inside Reference Data set out to try and make sense of a dizzying array of regulation whose provisions are still a work in progress or in the process of implementation, and what these will mean for data managers.

The European Union is currently contending with how to handle financial transaction taxes. Its governing body, the European Commission, set out a proposal, and adjusted it in mid-February in an effort to reach agreement from its member nations.

Nonetheless, France and Italy have forged ahead with their own separate transaction tax plans. This means data managers have to figure out what financial instruments are affected by the different tax plans, at least until the Commission catches up. Providers such as Interactive Data and GoldenSource are addressing the complexities presented by the French and Italian plans, but the Commission’s altered tax plan actually covers more types of assets, widening the definition of which assets are “in scope” of the tax rules.

If that isn’t enough for Europeans, there’s also the European Market Infrastructure Regulation (EMIR) drafted by the European Securities and Markets Authority (Esma), which is likely to complicate legal entity identifier (LEI) proceedings by proposing the use of Bank Identifier Codes rather than the US-generated LEI pre-cursor, CICI (the CFTC Interim Compliant Identifier).

Esma’s identification standard, particularly for counterparty data, is tougher than the CICI, thus creating a likely “separate but unequal” division between US and European data sets. CFTC-registered trade repositories will have to spin-off European cousins to conduct business in Europe, if EMIR proceeds as it currently is written.

Therefore, it’s no wonder, as EDM Works’ Dennis Slattery says in “Dark Clouds for Off-Site Data”, that regulatory compliance concerns are diverting resources from operational changes that could improve reference data management in the form of cloud computing resources.

Small firms are still choosing to use cloud resources out of necessity, but it’s become clear that achieving consistency by addressing interoperability will take more time. This insight is seconded by Wipro Technologies’ Jennifer Ippoliti, who observes in her “Industry Warehouse” column that we are years away from capturing the corporate genome proposed by Thomson Reuters’ Tim Lind.

What our March issue has captured is that the visions are out there for better reference data management through better use of resources and new data management ideas. The circumstances may be an impediment now, but that will change.