Granularity Instead of Entity-Centricity in the Financial Regulatory Data Architecture

21 Pages Posted: 18 May 2015

See all articles by Irina Leonova

Irina Leonova

Bank for International Settlements (BIS) - Financial Stability Board (FSB)

Date Written: May 15, 2015

Abstract

The concepts of comprehensive regulation, financial networks, linkages, contagion risk and complexity have become the everyday reference in discussions about financial regulation. Most of these concepts of complex adaptive systems have been developed and originally deployed in quantitative fields such as biology and information theory. But while financial economists have adopted many high level principles and concepts of network theory, less attention has been devoted to defining the data requirements to support effective analysis of complex systems and networks. This conceptual framework of the financial system as a complex, adaptive system leads to the conclusion that one of the key, if not primary, inputs for the assessment of systemic risks and the successful analysis of the propagation of shocks through the tightly interlinked financial system is proper data, or to be specific-granular data. The regulatory community needs to make a conscious decision to walk away from the categorization of financial companies and products into out-moded and ill-defined ‘buckets’ and rather to view modern financial markets through the prism of four fundamental, foundational, elements: entity identification, relationship information, product elements, and transaction tracking from which all required regulatory financial data can be readily constructed. The paper discusses policy considerations with respect to the modern financial data framework and offers a transition plan to convert the current regulatory data approaches to that new framework.

Keywords: relationship data, granularity, financial data, financial data infrastructure

JEL Classification: D4, D8, G2, G3

Suggested Citation

Leonova, Irina, Granularity Instead of Entity-Centricity in the Financial Regulatory Data Architecture (May 15, 2015). Available at SSRN: https://ssrn.com/abstract=2607350 or http://dx.doi.org/10.2139/ssrn.2607350

Irina Leonova (Contact Author)

Bank for International Settlements (BIS) - Financial Stability Board (FSB) ( email )

Basel
Switzerland

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
73
Abstract Views
568
Rank
580,987
PlumX Metrics