Understanding BCBS 239

Published On December 06, 2017

The final draft of BCBS 239 is still some time away, but financial institutions need to know the basics of the rule to properly prepare themselves.

The Basel Committee on Banking Supervision’s regulation 239 (BCBS 239) for data management stresses the need for proper control of the data supply chain, establishing general principles for the oversight of data and how people relate to different sets of data.

As reported in Banking Technology, the rule requires financial institutions to approach data management from an enterprise-level perspective, agreeing to definitions of terms for data elements, controlling of the data supply chain and establishing timely reporting capabilities across the entire chain. This includes entities, securities, complete transaction histories and all financial positions across the entire enterprise.

The proposed rule also requires that financial institutions be able to effectively measure and aggregate risk across the enterprise, which again requires complete, secure data management that can measure risk at a single point of time, as one does with a balance sheet, along with being able to report risk trends and histories.

The final draft of BCBS 239 is still some time away, but financial institutions need to know the basics to properly prepare themselves for the data management capabilities they will need to have once the final rule becomes law. As Banking Technology points out, BCBS 239 is tremendous in its scope, requiring that financial institutions be able to classify all data and link and standardize information — capabilities that are beyond the scope of legacy data management systems.

Installing new systems to comply with the rule may be beyond the technical expertise of banks. If not appropriately scoped and monitored, the costs of such upgrades could be prohibitive as well, though they will help financial institutions streamline their businesses. To ensure compliance with BCBS 239, financial institutions need to have access to the records management breadth, depth and expertise necessary to meet its requirements. As most financial institutions don’t have these capabilities in house, they need to work with a trusted partner with a long history of providing this type of data management.