BCBS regulations introduce principles for managing information and data across the entire organization. Firms are now focusing on implementing centralized data management platforms that are designed to:
Managing and distributing legal entity reference data is a challenge firms have struggled to effectively manage for a number of years. Although inefficiency and low quality have long been tolerated, the need to address this problem is now more pressing. Mark Davies, General Manager of Avox, explains how the company’s Managed Data Service is continuing to grow and support client demand for accurate and timely legal entity reference data to help facilitate decision making, compliance and regulatory reporting.
What were the major trends in the legal entity reference data business in 2014?
The most significant trend last year was how the sheer weight of demand for accurate information from many parallel initiatives has put huge strains on the practices most firms have in place. These pressures include demand for greater risk transparency, the ability to respond quickly to real world political, natural and credit events, increased tax reporting demands and the wave of derivative reporting regulations stemming from the G-20 Pittsburgh summit. We are also seeing a move among buy-side firms to outsource the management of legal entity reference data for the entities they deal with due to the cost and scale of performing the process in-house.
What are some of the challenges with managing legal entity data?
One challenge is what we call the “40%” rule. Companies are constantly evolving so much that we estimate up to 40% of legal entities will change name, ownership, address or operating status each year. The challenge centers on identifying relevant changes and managing this content efficiently, especially when you consider that large financial firms need to track in excess of 500,000 clients, issuers, agents and guarantors globally. And this is only one part of a much larger challenge: entity reference data needs to be married with transaction data and fed to appropriate systems and regulatory reports in real time to facilitate accurate reporting and quality decision-making.
What steps has Avox taken to meet client and industry needs?
One of the principal things we did last year was strengthen our Managed Data Service to take on the burden of sourcing information globally and delivering timely updates for common and regulation-specific data. A key 2014 enhancement was to make this data available to our clients through direct web services and technology partners. We have also integrated Avox with other DTCC data services, including Clarient, Global Trade Repository (GTR), Omgeo ALERT and the Global Market Entity Identifier (GMEI).
What are your expectations for 2015?
We expect to see an increase in the issuance of LEIs during 2015 as other major G20 jurisdictions implement derivatives reporting regimes. We also know risk reporting requirements are front and center for many banks, including new requirements from the Basel Committee on Banking Supervision (BCBS) for strong internal data governance and sourcing of information, along with new requirements under MIFID II.