BCBS 239 Wasn't The Start of Risk Data Aggregation

The Basel Committee on Banking Supervision (BCBS), with its BCBS 239 "Principles for effective risk data aggregation and risk reporting," [as covered in "Impactful Actions," a feature Nicholas Hamilton wrote in April], has set out a January 1, 2016 deadline for firms to comply with its prescription for tracking risk through collection and management of relevant data.

BCBS 239 sets out 14 principles, including several that could be described as simple ideals, such as completeness, timeliness, adaptability, accuracy, being comprehensive in nature, clarity, usefulness and higher frequency. BCBS 239 is also effectively a corollary to the committee's Basel III capital adequacy regulation, which stopped at mandating that firms have enough resources to cover their risk, not getting into how they may actually determine or monitor that risk.

The discussion in Inside Reference Data's May 15 webcast, sponsored by S&P Capital IQ, indicated that with risk data aggregation, the industry appears to be making progress at managing multiple types of data and reacting to regulatory mandates such as those contained in BCBS 239. Still, there may be some pushback against the 2016 deadline, as experienced chief data officer John Bottega, now a senior advisor for the EDM Council, said in a May 14 webcast covering compliance data issues, organized by data management automation provider Collibra and financial industry advisory company Element 22. "It won't happen by 2016," he says. "It will take some time."

Bottega correctly notes that the goals set out in BCBS 239 are vague. "It's hard to pinpoint because the specifics of what's considered adherence or what constitutes adherence, is still up for grabs," he says. "There are still a lot of conversations going."

Still, others see BCBS 239 as more of a symptom that risk data aggregation efforts have hit a tipping point. "A lot of firms are in the process of working on data management and governance," said Peter Serenita, group chief data officer at HSBC in New York, during the May 14 webcast. "Even before BCBS 239, data value had reached a level higher than ever before in organizations. ... BCBS 239 is a reinforcement of what needed to be done and was being done in a lot of places."

If BCBS 239 is simply ratifying improvements that the industry already has underway, it doesn't seem logical that there would be as much pushback by the industry. And where standards and guidelines such as same-day trade settlement have languished for years, more recent regulatory mandates, namely the US Fatca tax withholding rules, only had key deadlines delayed slightly – in terms more like weeks or months, rather than years. Therefore, those who are unprepared to follow BCBS 239 standards shouldn't count on a delay by its authors before 2016 arrives.