Our recent joint ISITC Europe/CISI webcast tackled the age-old, thorny problem of data quality in the financial markets. Reference data, the vitally important data that relates to efficient settlement of financial transactions was highlighted during the panel discussion. The panel debated legacy data supply chains and the difficulty of retaining data quality, as the data moves between a myriad of databases. It was mused that the ultimate solution could be a Data Sharing Utility, which would be accessible by all, for settlement purposes. But with some regulatory teeth to make the Issuers of data responsible. Such a super database would have to be maintained as a not-for-profit and could possibly be based on a SWIFT governance style model.
It does not appear to be a technology problem as the range of technologies available today, including Blockchain DLT, AI (Artificial Intelligence), Machine Learning and 5G combined, offer a multitude of opportunities to build a data utility platform.
However, the main barriers to the creation of a data sharing utility are: How will the build be funded ? By whom and what return on investment? That is assuming there are no charitable donations by philanthropic financial firms. Given that a not-for-profit data utility would hardly attract investors, looking for dividends. So a long shot one might think!
The existing data supply chain are very unlikely to sit back, nor support this type of data utility. So one assumes any moves to create the data utility will have to have the backing of existing data vendors. Although Turkeys don’t often vote for Christmas they might if the meat on the table was not Turkey.
How then might Data vendors vote for a Utility?
It might be most likely if any data utility was central to their own data source. If data vendors could guarantee that the data from the utility was 100% accurate. Internal overhead cost savings combined with operational efficiencies and risk reduction within their operation may well on balance, make it worthwhile. The data vendor might then pass on the cost reductions to their customers maintaining their profit margin. Fanciful notion i know but in these times some creative thinking might benefit all concerned.
The data panel discussed much of interest but perhaps most surprising of all, was that the panel thought, personally, that the chance of such a utility materialising in the future, was between 60/70%. No time limit was considered, but it looks like the odds might be getting shorter.
Author: Gary Wright, Director, ISITC Europe CICPosted on