MONDAY MONITOR: SIBOS 2009: Before Dealing With Systemic Risk, How About Getting Data on It?
September 14, 2009
THE WEEK THAT WILL BE
Events and news to watch for in the week ahead.
MONDAY, SEPT. 14
Swift Sibos 2009, global financial conference, Hong Kong
High Performance Computing on Wall Street 2009 Roosevelt Hotel, New York
TUESDAY, SEPT. 15
Technology Technology Solutions for Asset Management Hyatt Regency, Jersey City
WEDNESDAY, SEPT. 16
WEBCAST: House Financial Services Subcommittee to Examine Role of Technology in Financial Services Oversight, 2:00 p.m.
THURSDAY, SEPT, 17
AUDIOCAST: Discover Financial Services quarterly earnings call, 11 a.m. EST
WEBCAST: Flash Orders, Proposed amendment to Reg. NMS Securities and Exchange Commission Open Meeting, 2:30 p.m. EST
ON THE MONITOR:
SIBOS 2009: Before Dealing With Systemic Risk, How About Getting Data on It?
By Chris Kentouris
Does anybody have the data in place to really deal with systemic risk? asks John Liechty, associate professor of marketing and statistics at Penn State Universitys Graduate School of Business.
So far the tools to collect nor to analyze that breadth and depth of data dont exist. But the Obama Administrations proposal to create a systemic risk manager will require the collection, normalization and analysis of data from sources as diverse as corporate and municipal issuers to the worlds largest financial institutions. The crème de la crème of Wall Street: Goldman Sachs, Morgan Stanley, JP Morgan Chase, Citigroup and Bank of New York Mellon would just be just a handful of the firms contributing information on the securities they hold and the transactions they do.
Without a vast array of data on just what securities are being traded and when regulators have little or no hope of understanding where the systemic risks lie. Without standardized reporting and a dedicated team of researchers to crunch the data it will be impossible to make sense of the flood of information.
As one of the founders of the Committee to Establish the National Institute of Finance, Liechty wants the U.S. government to create such a national data repository and give a systemic risk manager the right tools to manage systemic risk.
Yet another goal of the repository would be to help firms cut down the time it takes for them to cleanse their legal entity and reference data and dramatically reduce the amount of effort needed to clear trades, thereby saving them multimillions of dollars per year .Morgan Stanley has estimated it could save on the order of $200 million a year in operating costs, according to Liechty. The total savings to the financial industry could be as high as $1 billion annually.
Supporting the NIF are more than 60 academics, financial analysts, former regulators and representatives from financial services firms, as well as the Enterprise Data Management Council, a New York-based non-profit industry group specializing in helping financial firms promote the importance of enterprise-wide data management and raise the profile of data management at the senior levels.