Maximizing the value of EMIR and MiFID II investments: FOUNDATION FOR A DATA SUPPLY CHAIN

Part 1: Foundation for a data supply chain

Financial services companies are, in essence, data handlers and processors. As the industry evolves and its data needs become more complex, a robust data supply chain is vital for delivering superior products and services to customers and partners. As part of compliance with EMIR and MiFID II, firms have already invested in what could be the foundation for such data supply chains. Now is the time to leverage the investment.

The complexity of change from regulation and customer demand drive the need for a data platform that achieves commonalities across business units and multiple regulatory requirements. This platform will (gradually) ensure that solutions to new data and regulatory requirements are quick and easy to implement, and are not duplicated across functional, geographic or legal silos.

Data platforms will bring together multiple underlying functions, such as:

• Artificial intelligence and machine learning

• ETL (extract, transform, load) processes for data

• XBRL feeds design

• Development of data lake(s)

• Underlying and supporting ontologies (including data models and glossaries).

Financial firms have made major investments to meet EMIR and MiFID II requirements for improved data management. In addition, they had to comply with regulations such as BCBS239 and GDPR to address the fundamental issues of data quality and transparency. Investments in these initiatives should be used as a foundation for competitive advantage towards managing future regulatory demands.

Firms taking aggressive steps towards building a data supply chain are on the right track. Those who are not, risk lagging behind once GDPR and PSD2 come into force this year. The value of data supply chains will also be realized in the wake of future regulation in the data domain (e.g. regarding IoT, big data, ePrivacy, etc) and evolving initiatives such as a revised MiFID II (expected in 2019), SFTR and amended AMLD4 (as well as AMLD5 and 6).

Future business models in financial services depend on effective data management, and not just because the regulator demands it. Automated data manipulation and visualization will be essential for creating meaningful reports for decision-makers and customized products for clients. The need to become better at handling data will only increase, as evidenced by recent examples of data misuse/lack of control (e.g. Facebook and Cambridge Analytica). Building a data supply chain must become a central investment for future regulatory management.