The Basel Accords are a set of recommendations on banking regulations issued by the Basel Committee on Bank Supervision (BCBS). These recommendations focus on capital risk, market risk and operational risk. The purpose of the accords is to ensure that financial institutions have enough capital to meet obligations and absorb unexpected losses.

Basel II and Basel II have had and continue to have a significant impact on financial institutions. Data quality has been elevated to being a vital component of a new risk-based capital management framework. The onus is on institutions to effectively manage counterparty data. They have no other choice but to pay greater attention to data accuracy and completeness. Here are a couple of examples:

Data accuracy and profitability

New proposals focus on strengthening capital requirements for counterparty credit risk arising from derivatives, repo, and securities financing activities. Derivatives and reverse repo players are directly affected by these higher capital requirements. Understanding your counterparties becomes not just a matter of compliance but a question of profitability as it directly involves capital allocation.

Data completeness and reporting

Banks must calculate their risk exposure to a counterparty throughout their entire business as opposed to carrying out calculations confined to specific business silos. For global financial institutions, this means conducting analysis on data coming from businesses located in many different locations and presented in different formats and with different levels of completeness.

It is self-evident that data quality can no longer be considered a nice-to-have. In a more stringent regulatory environment, the counterparty information you gather and process is critical. The emphasis on clearly understanding the entities your firm is exposed to is even greater in Basel III.

Joss Technology provides a comprehensive and specialized suite of innovative cleansing and maintenance tools that will get you there.