The U.S. Securities and Exchange Commission should create an Office of Data Strategy overseen by a Chief Data Officer in order to make sense of new data projects such as Consolidated Audit Trail, swap data repositories, and Form PF, according to SEC Commissioner Kara Stein.
“Over the last five to ten years, data management and analysis has become more complex and require a strategic approach," Stein said in a speech on Tuesday at the Sifma Operations Conference in San Diego.
The Data Strategy office would ensure a comprehensive approach to data collection, business analysis, data governance, and data standards. “Other regulators have proactively moved forward on forming similar offices,” said Stein. “I believe that the Commission needs to act now to develop a group solely focused on data, including building an infrastructure to facilitate the use of data throughout the agency.”
One of the most important focuses of the new office would be promoting data standards and taxonomies. A key role of the office should be identifying data gaps and refining existing data collections. This should be an evergreen process whereby the Commission – through the Office of Data Strategy – is constantly seeking to improve upon its data quality and filling gaps.
“We should be testing our forms and data sets continuously and searching for better ways to obtain clear, usable data,” said Stein. “As we analyze data and receive feedback from market participants, we can tweak and refine how we collect and ask for data to produce better, more reliable results.”
CAT is one of the largest data projects that have ever been undertaken and represents a paradigm shift in how the SEC oversee the U.S. securities markets. It is estimated that CAT will receive over 58 billion records each day, covering all market participants across numerous asset classes, making it the world’s largest repository of data from securities transactions.
“With a CAT, market oversight will improve as transparency of transactions across their entire lifecycle improves, including linkages to beneficial owners,” said Stein. “Market data will increasingly serve as the source of rulemaking. It can also be used to better understand potential trends or abuses.”
It is also important for the Commission to think globally about standards and data. For example, the International Organization of Securities Commissions in conjunction with the Committee on Payments and Settlement Systems has been working to develop a framework for derivatives data reporting and aggregation requirements.
“It is critical that we work together as a community, rather than independently,” Stein said. “This includes collaborating with other regulators and market participants whenever possible.”
Featured image by Konstantin Yuganov/Dollar Photo Club