Financial InterGroup
Specialists in Risk Management, Data
Management and Technology

Tel: +1 917 414 3608
Email: info@financialintergroup.com

Global Data Utility – Evolving the Central Counterparty for Data Management (CCDM)

$595.00

 

 

SKU: f_rp_05

Description

One of the longest standing and intractable impediments to global straight-through-processing in the financial services industry has been the proprietary and non-standard nature of reference data. Regulators were made aware of this while rummaging through the collapsed ‘basement’ of Lehman Brothers and trying to determine who was Lehman, what was its financial exposure and who had been put at risk by Lehman’s bankruptcy.

The CCDM is described in this research note as a global facility administered by a global standards setting body that assures the completeness, accuracy, security and accessibility of legal, client, instrument, contract and transaction identities and their associated reference data.  Its establishment is proposed as an industry sponsored, government regulated global standards setting body that maintains a virtualized distributed database connected through an intelligent secure federated network acting as a global repository of standard datasets for use in financial transactions.

The CCDM organizes and maintains standard product (Unique Product Identifier – UPI) and legal entity (Legal Entity Identifier – LEI) codes; transaction identification calculation algorithms; and data tags and reference datasets that are used in:  reporting financial transactions to regulators; in aggregating financial transactions; and in assuring settlement amongst counterparties.

The CCDM is the global center for managing and overseeing established and new data standards. The resultant datasets are registered and catalogued with the CCDM.

Number of Pages = 17

Number of Figures = 8

Extract

“Reference data about a client or product should be consistent across each financial transaction’s life cycle and throughout the financial supply chain. Reference data about changes to either should similarly be consistent across the financial supply chain. However, poor quality and duplication of reference data is pervasive: in large financial enterprises; with data vendors that supply proprietary codes and associated data; amongst financial market utilities and throughout the industry, leading to significantly higher risk and operational costs. When identification codes and reference data that should be identical are not, it causes miscalculated values, misidentified products and counterparties, and involvement with multiple supply chain partners (trade repositories, custodians, paying agents, et al) to resolve the problem. Inappropriate transactions and individual transaction failures cause monetary loss, higher labor costs, fines and the potential for systemic failure.”

Table of Contents

The Issue
– Lehman Brothers
– Definition of Reference Data
– Definition of Financial Transaction
– Consequences of Getting it Wrong
– Costs
History
– BASIC Committee
– Group of Thirty
– Securities Glossary Project
– T+1
– Industry and Government Leadership
Solution
– Clearing and Settling Reference Data
– Arbitrating Multiple Sources
– Role of Financial Stability Board (FSB)
– Role of the Office of Financial Research (OFR)
– The Role of the GLEIS
– The U3 Global Identification Coding System (the Barcodes of Finance)
Benefits
– CCDM – A Global Solution
– Multiple Reference Data Utilities
– Input at Source
– Cost Savings
Getting There From Here
– Data Maturity Progression
– Single Source of Digitized Data and Nomenclature
– Technical Model – a Virtual Database and Federated Network (the Blockchain?)
– In Regulators’ Own words
Contact

Figures

Fig 1: Reference Data Challenge
Fig 2: The Risk of Getting Data Wrong
Fig 3: Proprietary Data Identities
Fig 4: The CCDM Utility
Fig 5: Multiple Reference Data Utilities
Fig 6: XBRL Message Format
Fig 7: Data Maturity Progression
Fig 8: Single Source of Identity and Reference Data