Unavailability of Big Data Puts Finance in Trouble
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Unavailability of Big Data Puts Finance in Trouble

By CIOReview | Monday, March 24, 2014

 FREMONT, CA:  U.S. cyber spooks have created unexpected fallout in the recent years in different perpendiculars. In 2013, Edward Snowden got global attention when he leaked documents related to U.S. National Security Agency and European officials. In financial exchanges and market data groups also, American spies have created fallout leading to financial instability, reports Gillian Tett of the Financial Times.

Earlier information regarding private derivatives was inconsistent as trading records were scattered in numerous institutions and locations. But now the issue has given rise to the question -  who can see the data generated in complex securities?

Regulators have seen financial crisis and after having came across AIG’s fall due to the cracks in the reporting system, the investors and regulators decided to collect all data together so that data can be easily monitored. By creating this data base, the financiers and investors can check the financial risks and can act accordingly.

Demanding the creation of a “joined up” database last year, a committee linked to the Bank for International Settlements reported, “With the current structure of trade repositories, no authority is able to examine the entire global network of over-the-counter derivatives data at a detailed level.”

Having come across the financial crisis, the U.S. Congress has felt the need for better monitoring and created an Office of Financial Research. The office is supposed to implement Big Data and other computing services to fill up critical gaps in analysis and data. “The financial crisis revealed serious deficiencies in our understanding of vulnerabilities in the financial system and the financial data needed to measure them. Our mission is to fill in those critical gaps in analysis and data,” says Richard Berner, OFR head, to Congress.

As these efforts are on their way to check financial risks, the news of U.S. spying scandals are making the European politicians and bankers more nervous about sharing information to centralized databases.

The concerns for the security of data have emerged when the U.S. government had subpoenaed the Brussels-based Swift banking payment system to force it to hand over confidential information about financial transactions to enable the tracking of terrorists. The NSA scandal has further increased the furor and in October, the European parliament passed an action demanding the restriction of the U.S. access to the Swift System.

The situation has hindered the promotion of data center in other areas making the data bases fragmented. “The financial crisis demonstrated the need for financial supervisors to get a holistic view. Sadly this may be in jeopardy. The NSA scandal has caused many to reassess the risks of their personal data being shared across borders,” says Kay Swinburne, a British MEP who sits on the chamber’s influential economic and monetary affairs committee.

 European politicians still hopes that if the EU and the U.S. signs a data protection agreement they can have transparency over the financial systems. But this might take a long time to come into action as the international politics have obstructed the way of Big Data in the finance.