Boston, May 16, 2012 – A new report from Aite Group examines key trends within the arena of legal entity data management, including the industry’s adoption of a new standard for identifying legal entities for regulatory reporting purposes. It is based on a January to April 2012 Aite Group online survey and interviews with individuals responsible for legal entity data management at 23 financial institutions on the buy- and sell-side.
That a relatively significant number of financial institutions have put considerable effort into legal entity data management over the last 24 months suggests that it is no longer a second-tier item within many financial institutions. Spurred by the financial crisis and the ensuing regulatory avalanche, financial institutions have been forced to reconsider their counterparty risk exposure assessment capabilities, a key part of which is being able to accurately identify legal entities. While levels of investment vary from firm to firm, overall investment is increasing. Aite Group expects spending on legal entity data management to reach approximately US$197.5 million by 2015, driven by regulatory compliance, planned support for the risk management function, and more.
“More attention is now being directed at managing legal entity data within buy- and sell-side firms, but there is a long road to travel before firms will be able to meet incoming regulatory and client requirements for transparency,” says Virginie O’Shea, analyst with Aite Group and author of this report. “Legal entity data management teams will appear in firms that currently lack such a function, and technology spending to further automate the space will gradually rise. One tier-one sell-side firm noted that its spending on legal entity data has risen 100% over the last five years, and we expect many more firms to engage in similar levels of investment.”
This 47-page Impact Report contains 22 figures and two tables. Clients of Aite Group’s Institutional Securities & Investments service can download the report.