United States: SEC Chief Economist Highlights Challenges Of Big Data
SEC Chief Economist and Director of the Division of Economic and Risk Analysis S.P. Kothari highlightedpolicy challenges of big data.
Speaking at the National Bureau of Economic Research (NBER) conference on big data and high-performance computing, Mr. Kothari stated that the SEC faces three main big-data policy challenges: security, technology and communications.
First, he said that the “volume, velocity, and variety of big data” create security risks. Mr. Kothari urged the SEC to be “mindful of the data it collects and its sensitive nature.” Second, he said that technology poses an “arms race” among firms, with the risk that those who have better technology will profit significantly at the expense of others. Third, he said that issues concerning big data are complex and “increasing require specialized training to understand.” He warned that the SEC focuses on retail investors, but there are numerous stakeholders including “pension funds, municipal bond issuers, brokerage firms, hedge funds, and Congress.” In communicating to each group, he said, “one size does NOT fit all.”
Mr. Kothari also described the potential of big data with respect to identifying and stopping bad actors. He pointed to the Consolidated Audit Trail, which, when completed by the self regulatory organizations, “will provide a single, comprehensive database enabling regulators to track more efficiently and thoroughly all trading activity in equities and options throughout the U.S. markets.”