We interviewed some of our product experts to find out what they see when they look back on 2023. Our own Jeremy Katzeff, Volker Lainer, and Charlie Browne all offer their thoughts in this 2023 data management year in review.
Jeremy Katzeff, CFA – Head of Buy Side Solutions
2023 was the year that we saw the industry move from plan to action in cloud data management. Firms made significant progress in their cloud journeys by implementing new toolkits, innovating themselves, and generally rethinking what next looks like. Providers across the industry have built and enhanced their offerings which have brought tangible results that have moved their organizations forward.
We at GoldenSource hit milestones internally, taking the significant step of developing cloud native applications and releasing them for our clients and partners, and they in turn have been engaging us for new ideas with an eye towards the future. This is interesting to see given the apprehension to cloud adoption even just three short years ago.
Volker Lainer – Head of ESG, Connections and Regulatory Affairs
2023 was a year where much of the ambiguity or uncertainty around ESG elements within the industry were removed. Adoption, use, regulation, and impact of ESG metrics all increased substantially in tangible, measurable ways, moving the entire industry forward.
The implementation of several regulations such as SFDR and similar regimes globally have settled in. Another important milestone on standardization was the launch of the new ISSB standards, which has absorbed and built upon the globally successful TCFD, CDSB, and SASB, and is now able to add further dimensions to its framework.
Some aspects of the EU’s Green Deal are now getting revisited, which will result to adjustments in the midterm. Its groundwork – its concepts and certain features such as taxonomy criteria – has started to become adopted in other regions as anticipated. Namely APAC, and towards the end of 2023 California’s Climate Corporate Data Accountability and Climate-Related Financial Risk Acts, which have received strong attention.
Despite prominent political debates in the US, which will certainly continue during this election year, reputational exposure is a concern for all industries. We see companies turning to well-reputed frameworks such as SDG 17 for vetting and improving their strategies, as well as communication.
With the foundational steps taken and initial measures put in place, Greenwashing has become apparent thus receiving a lot of airtime. Many of that next iterations of disclosure regimes are geared very specifically to tightening up those identified Greenwashing loopholes. AI has started to play a role, so far trying to find its applications just like in other domains.
On the usage of ESG metrics, the individual pillars have come stronger into focus. While Scores and Ratings, typically vetted by consulting multiple sources’ methodologies, are used for indicative assessments, the concrete ESG and sustainability use cases are looking at specific KPIs. Market research has shown continuously increasing acquisition of dedicated ESG datasets, particularly in the Asset Management space to fulfill both regulatory requirements and investor demand.
Climate change impact has arrived in the middle of societies globally, and consequently a lot of work has gone into refining models on climate risk, near to long term, for the financial industry. Biodiversity considerations have picked up as expected, propelled by several industry events which have substantiated its central role to other environmental and socio-economic goals.
All of these contribute to an exciting time for ESG, and I look forward to what 2024 holds.
Charlie Browne – Head of Market Data and Risk Solutions
As I’ve said previously, in 2008 there was a crisis, and as a result two things happened. First was a response in the form of regulation: for banks, this took the form of Basel III, FRTB, IPV, and others focused on market risk and valuations. For the buy-side, they contended with SEC 22e-4 and 2a-5 in the US, and others around the world, focusing on the centrality of prices.
In both cases, the regulators have started to realize that firms can’t do any of this without central repository of pricing, valuations, and risk data, as well as lineage and governance. What good is a price unless you can prove that’s where the market is trading?
2023 was the year that the regulators realized that, to gain the insight they need to properly regulate financial markets firms with respect to their market and pricing data, they need to go beyond just calculations and into where the data is actually coming from. SEC 2a-5, despite being a 2020 regulation, was again put in the spotlight as firms continued to invest in market data solutions and infrastructure to address the reg in 2023.
The European Central Bank’s guidance on risk data aggregation and risk reporting (RDARR) was issued in July of 2023, a set of standards focused on better risk and finance data management through advanced digitization of operations, data lineage & governance, golden sources, and data validation, leading to lower operational risk due to data issues, fewer large investment losses, and other benefits.
2023 was also the year the industry started to move in a direction that re-enforced our long-held view that, when market data is clean and consolidated, firms can address all the valuation and market risk regulations from a single golden source.