Company ID Tags Highlight Data Challenges
The advent of company ID tags presages a wave of data management challenges for financial firms, which in turn is upping the demand for enterprise data management (EDM) technology.
FinReg established the Office of Financial Research (OFR), a division of the U.S. Treasury that’s charged with collecting data to support the Financial Stability Oversight Council.
The OFR is standardizing the manner in which parties to financial contracts are identified in the data it collects on behalf of the FSOC, including the Legal Entity Identifier (LEI) and institutional arrangements for issuing and maintaining identifiers and associated reference data.
“In today’s world there are many ways of referring to business entities involved in financial processes but no single identifier,” Tom Stock, senior vice president of product management at GoldenSource, told Markets Media. “When implemented, the LEI would become the standard universal reference number for these entities. “
New regulations such as MiFID II, Dodd-Frank, Basel III and Solvency II will have a huge impact in the enterprise risk arena.
“This is because counterparty exposure needs to be properly aggregated across multiple legal entities and the current absence of a single source to provide cross-referencable data makes this a complex procedure,” said Stock. “We also expect further reporting requirements from the OFR as upcoming regulations are finalized, which will drive further demand in this area.”
By combining securities, customer/counterparty and position/transaction data into a single linked data store, GoldenSource’ EDM helps organizations determine enterprise risk, said Stock.
“Counterparty cross referencing and hierarchies are an integral part of our solution and are fully enabled to integrate universal LEI’s when they become available with no changes to our core systems,” he said.
With the advent of real time oversight and surveillance real time security masters such as the GoldenSource security master become even more important. “The key here is the real time nature of the system,” said Stock. “You need the ability to on a real time basis accept requests for security master information from trading immediately retrieve that data from data vendors and make it available for enterprise usage all on an interactive basis.
Without this real time security master component the consistency and completeness of the data reported real time cannot be ensured, he said.