Posted on Wednesday, January 30, 2019

Richard Berner, Executive-in-Residence at the Center for Global Economy and Business at the NYU Stern School of Business, and Adjunct Professor in the Department of Economics, and Kathryn Judge, Professor of Law at Columbia Law School.  from New York University and Columbia have written a white paper, The Data Standardization Challenge, which examines the numerous public and private benefits from standardization and the many frictions favoring the status quo, noting:

” At its best, data standardization can serve as a crucial ingredient in building and sustaining the trust, accountability, adaptability, and efficiency that are essential for finance.  And such standards can be the building blocks for a revolution in regulation and regulatory reporting that will improve efficiency, just as the bar code has done for industry and consumers.”

The paper goes on to cite the impediments to standardization: “…First, the costs of implementation are borne by a few up front, while the benefits are spread widely over time… Second, implementing data standards requires coordination from diverse parties, not only government and market actors, but various groups within those broad categories…[third] many firms lack the technology and enterprise-wide data management and governance practices that are needed to allow them to use the data to better identify and manage their risks… Fourth, in the United States, the balkanized regulatory structure is an obstacle to adoption of data standards.“

Finally, the authors point to the critical role that government must play in establishing effective standards: “We strongly believe that solving these collective action and related problems is a role for governments.  Designing and implementing appropriate data standards are important mechanisms through which the government can fulfill these dual roles of enhancing the efficiency of private activity and obtaining the high-quality information necessary to better serve the public at large.”

Read the blog.

Read the paper: The Data Standardization Challenge

More on Kathryn Judge: Judge is an editor of the Journal of Financial Regulation, a Research Member of the European Corporate Governance Institute, and a member of the Financial Research Advisory Council of the Office of Financial Research. Read full bio.

More on Richard Berner: Berner served as the first Director of the Office of Financial Research (OFR) from 2013 until 2017. He was Counselor to the Secretary of the Treasury from April 2011 to 2013, and Managing Director, Co-Head of Global Economics and Chief U.S. Economist at Morgan Stanley from 1999 to 2011.  Read full bio.