The FICC Markets Standards Board (FMSB) has today published its second Spotlight Review examining the crucial role of data management in the stability and resilience of wholesale FICC markets and financial systems.
The Spotlight Review considers:
- seven sources of critical data risk covering business continuity, data confidentiality, trading, aggregate exposure, regulatory enforcement, ownership rights and security risks relating to misconduct;
- regulatory authorities’ work in this field and the benefits of increased standardisation across different international jurisdictions; and
- eight key components to promote effective data governance covering the data lifecycle, data policies, data taxonomy, mapping data sources, data movement and lineage, data classification, data leakage detection and data quality.
It establishes the foundational need for robust data governance and management strategies, both within firms and between different markets participants who are active in rapidly changing wholesale FICC markets. The paper highlights the significant benefits to market participants from moving to a more centralized data strategy, recognizing the magnitude of centralization will vary from firm to firm depending on size, complexity and business models.
Martin Pluves, CEO of FMSB, said: “I am delighted that FMSB is publishing this thoughtful paper on data management. Data drives today’s FICC markets. Ensuring confidence in data is vital to stability and resilience of the financial system. With exponential growth in the volume and sophistication of data, there are opportunities for increased transparency and improved overall efficiency of FICC markets. There are also great challenges and significant risks, explored in this paper. Given the growing importance of data there is an increasing interest in developing standards in this area and on strengthening data governance, areas FMSB and its diverse members are well placed to address.”
Gareth Ramsay, Executive Director of Data at the Bank of England, said: “The rapid pace of systems development and the increasing dependence of the financial system on data is a key strategic focus for the Bank. Therefore, the FMSB’s Spotlight Review is a welcome exploration of the critical role of data management for the financial industry. The key themes in the review, particularly the importance of data governance and standardisation, complement the Bank’s ongoing data collection review, which aims to make data collection more efficient for the Bank and for firms, and to improve our ability to use that data effectively.”
This Spotlight Review is the second in a series that is collectively looking at issues of FICC market structure and the impact of regulatory and technological change on the fairness and effectiveness of wholesale markets.
The Spotlight Review is available for download here: fmsb.com