Beware of what you ask for

The unintended consequences of regulation can be clearly seen when it comes to the rules requiring data validation. The way the rules are written, strict validation is mandatory and all invalid data is rejected. Rejecting invalid data sounds like a great rule but if we push this requirement to the upstream trading systems, it can have some undesirable consequences. So what’s so wrong about OTC Derivatives trading systems rejecting invalid data? Shouldn’t the data be entered correctly? The problem is that data is not necessarily bad but is often simply incomplete or unforeseen.