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Data Governance Proves an Enduring Challenge for Buy-Side Firms

Earlier this month, RIMES released the results of our fifth annual Buy-Side Survey. Each year, we question the heads of departments and senior professionals within some of the world’s foremost asset management firms, custodian banks, hedge funds, pension funds, insurance companies, private banks and wealth management firms to gain an understanding of the buy-side’s data management priorities and challenges. As we use a similar survey methodology each year, it is easy for us to track how buy-side firms’ thinking changes from year to year, providing important insights into their evolving data management needs.

What is immediately noticeable about this year’s findings is that data governance remains an implementation priority for the buy-side. This year, 65% of respondents cited data governance as their primary data management priority, up from 62% in 2016. These findings back up what RIMES is seeing on the ground: buy-side firms recognize more than ever they must rebuild their data governance strategies.

The likely reason behind this is obvious: between the 2016 and 2017 surveys the regulatory environment has undergone a significant transformation. In July, the Markets Abuse Regulation (MAR) come into force, bringing with it a range of new market surveillance and reporting requirements for buy-side firms. At the same time, buy-side organizations have had to plan for the impending implementation of the EU Benchmarks Regulation and MiFID II, which will add further cost and complexity to data management and compliance.

It is therefore a little concerning that buy-side firms are reporting governance remains a priority: it seems little has changed since 2016, and for many the work of updating their governance processes and systems remains to be done. Indeed, just 9% of the firms interviewed felt confident enough to claim they have a mature data governance program. If buy-side firms are to avoid falling foul of new regulations they must act now.

Fortunately, good data governance can be implemented more quickly, and more effectively than at any time in the past. The market has responded to the regulatory challenge by making available new ‘RegTech’ products that enable firms to take data governance expertise and technology as a service, usually delivered over the cloud. Such managed data governance solutions, including RIMES’ own RegFocus, allows firms to avoid the complexity of in-house infrastructure projects; reducing the cost of ownership and enabling rapid implementation.

For buy-side firms that have yet to respond to the new regulatory landscape, managed governance solutions offer the fastest and most effective route to compliance.

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