Collaboration with Regulators and Standard Bodies Essential to Reach Transparency Goal, Say Speakers

Following the financial crisis, there is a growing expectation that the market will see the introduction of new regulation, including regulatory initiatives changing requirements for how data is governed, standardized and managed. Panelists said it is now up to market participants to engage in the discussions to ensure these expected changes meet user requirements.

Some firms continue to regard regulatory intervention as taxing, and this mentality cannot be helpful for the industry. "It is in our best interest to ensure we move forward to provide transparency, and to achieve this, collaboration with standards bodies and regulators will be key," said a panelist.

New York-based Brian Buzzelli, Americas business owner, pricing and reference data at Thomson Reuters, said: "Regulators are reaching out to the financial information providers to better understand our security reference and pricing data, and are asking more insightful questions about how our clients use the data we deliver and the implications of increased regulatory scrutiny and reporting."

The lack of a standard international business entity identifier, which makes it challenging for firms to manage counterparty data, has been linked to the credit crunch and losses incurred from difficulties in calculating exposure to falling counterparties. This is now one of the issues regulators are expected to discuss.

New York-based Steve Lachaga, director, OTC equity derivatives strategic change management, Credit Suisse, said: "If all entities were identifiable by commonly used codes or identifiers, the entire industry would have been better able to systematically manage the challenging events of the past year." Yet, there is no obvious standard to turn to for regulators. The international standards discussions are typically long-lasting and suffer from lack of agreement in the market-place.

New York-based Karla McKenna, director of global transaction services at Citi, said: "We have to make sure we examine the standards we use and question whether these cover all the areas we require." She added that standards should exist to be able to support business processes. Specifically, ISO TC68, the ISO technical committee McKenna chairs that develops and maintains international standards for the financial services industry, has discussed the relevance of identification standards for financial instruments and parties to financial transactions as necessary to gain the transparency proposed by regulators.