Regulatory Agencies Fail to Finalize Data Standards, Procurement Implications Loom

Financial regulatory agencies, including the Department of the Treasury, Federal Reserve, Securities and Exchange Commission (SEC), Consumer Financial Protection Bureau (CFPB), and Commodity Futures Trading Commission (CFTC), are grappling with significant delays in finalizing joint data standards as mandated by the Financial Data Transparency Act (FDTA). Although these agencies successfully met an initial deadline by proposing shared standards for industry data submissions in October 2024, they have yet to issue a final rule, which was expected by December 2024. This persistent holdup opens up avenues for potential procurement activities tailored to modernization and data governance within these organizations.

In a report from the Government Accountability Office (GAO), it was revealed that while the proposed joint standards aimed to establish data that is machine-readable and consistently identified, the agencies have encountered various implementation challenges. Issues such as legacy system modernization and the necessity for stronger interagency collaboration are curtailing progress. Specifically, the GAO pointed out that many regulatory bodies lack comprehensive cost-benefit analyses regarding their draft standards, which adds complexity to aligning their individual systems with a potential government-wide reporting initiative.

The FDTA, signed into law in December 2022, aims to harmonize data reporting rules across the financial sector and increase transparency. However, the deviation from the timeline stipulated in the FDTA indicates that agencies are still in the process of evaluating stakeholder comments and shaping the technical specifications necessary to support these standards. As interagency coordination remains a hurdle, the need for contractors adept in legacy system upgrades, interoperability solutions, and data governance is anticipated to grow as agencies strive to overcome these challenges.

The implications for procurement in the financial regulatory landscape are substantial. With the GAO emphasizing the need for a structured approach to data governance and the possibility of a unified government-wide regulatory standardization akin to Standard Business Reporting (SBR) frameworks used in other countries, such as the Netherlands and Australia, government contractors should prepare for the rising demand for tools and services that enable seamless compliance and reporting. There is a push for these standards to facilitate more efficient data management, which means increased opportunity for contractors that can deliver solutions to support the finalization and implementation of these standards.

The GAO’s recommendations suggest a route toward a more cohesive approach to financial data reporting, with well-defined roles and responsibilities distributed among the entities involved. This reorganization would ideally streamline processes, reduce redundancy, and enhance the overall regulatory landscape in the U.S. However, the lack of progress thus far shows that regulators still face substantial roadblocks that may stymie these potential advancements in the near term.

As procurement professionals look to align their strategies with these anticipated changes, there are several key points to keep in mind:

• The financial regulatory agencies are still in the early stages of defining the Technical Requirements, so contractors should remain flexible.
• As challenges to interagency collaboration persist, offerings in data governance and modernization services are likely to rise in demand.
• Organizations are advised to keep an eye on how evolving standards can influence product development, especially for compliance and reporting tools.
• Contractors should prepare for forthcoming solicitations that may focus on data integrity, security, and interoperability as agencies strive to meet the finalized standardization requirements.

The constant evolution within the financial regulatory landscape demands that contractors remain vigilant and responsive to emerging opportunities as these agencies work toward meaningful reforms that ultimately aim at enhancing operational efficiencies across the board.