It’s Raining Scrutiny
The High Price of Bad Data in Broker/Dealer Regulatory Submissions


Bruce Runciman, AxiomSL Executive Director – SME Regulatory Reporting

A Missing Datapoint

A security slips into your position data staging missing a critical piece of information. A bad or missing price, the wrong or missing credit rating, a missing security identifier or security type, bad or missing referential information, these are examples of determinable errors that result in unforgiving consequences.
Let’s imagine the missing bit of information is the security’s credit rating. You are unaware – because your data process did not catch the error before your monthly FOCUS submission. Now, the regulator reviews your reported data and the position flags as not rated.

The Scrutiny Begins: The Regulator Asks Tough Questions:

  • Is the unrated position marketable?
  • Does it trade actively in the market?
  • What is the margin rate you are charging your customers?
  • Do you have bank loan or prime financing for this position? What is the amount borrowed?
  • What liquidity factors are you applying to this security and to its financing?

As Do the Firm’s Risk and Trading Executives:

  • What are the impacts of this determinable error on our risk profile – on the firm’s cost of capital?
  • How can this be corrected? With what impacts?
  • How did this error happen in the first place?
  • What can be done to prevent this kind of determinable error in the future?

A ‘Simple’ Data Error Costs the Firm in Many Ways

Your firm pays a price in terms of time cost as it must respond to regulators and its own risk and trading management. Then it must allocate resources to rectify the error up and down the data stack, an effort involving a great deal of manual intervention and more people. The financial cost is all too apparent. There is an immediate impact on haircut and cost of capital.

Like a Bad Penny…

Unfortunately, without clean data processes and transparent data management and controls, the error is bound to turn up again next time. To avoid that eventuality, your firm will be forced to inject special labor-intensive manual checks to catch that specific security record before it embeds in the next regulatory report.

Come in Out of the Rain

Let’s start a conversation about how your firm can utilize AxiomSL’s data integrity and control platform and tailor-made solutions for broker/dealer regulatory reporting to improve data management, execute clean regulatory submissions, and gain actionable insights that impact cost of capital.
Implementing AxiomSL’s data-driven platform and broker/dealer solutions enables firms to trust their clean, transparent data and prepare error-free submissions. Imposing no constraints on where the data is located, the platform seamlessly integrates clients’ source data from disparate systems. Its enterprise-wide approach enables clients to reduce implementation costs, accelerate time to market and deliver trusted information.
Before submission, a firm can leverage the platform’s drill-down functionality and state-of-the art data-lineage module to inspect the original datapoints attached to a security. The platform’s analytics capabilities include generation of reports that delineate missing data, enabling correction of determinable errors at origin before bad data embeds in submissions. AxiomSL’s analytics also empower the firm to determine potential impacts on its haircut arising from missing data and assess how better to manage and improve its haircut and cost of capital over time.

About AxiomSL

Leveraging its more than 25 years’ experience, AxiomSL combines deep industry expertise with an intelligent data-management platform to deliver solutions around regulatory and risk requirements, with on-premises or cloud-based implementations. Its global footprint spans a client base of regional and global financial institutions with more than $39 trillion in total assets and covers more than 70 regulators, 50 jurisdictions and 4,000 regulatory reports.


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