March 21, 2006

Resolution Lies in Centralization

Building a central repository of all reference data, including customer and counterparty data, is the first step in a complex undertaking with many legacy data silos complicating the process of data retrieval, normalization, integration and aggregation. To reflect the true picture accurately, updates to reference data must be processed in real time and be available for distribution to other downstream applications.

However, this need not mean replacing every system at once. Huge investments have been made in legacy systems, and they are here to stay for the foreseeable future. For most firms, wholesale replacement is not an option, particularly in the current economic climate. A sound real-time reference data platform that is shared across the enterprise can be a good starting point.

Compliance and risk managers are key beneficiaries of such a centralized approach. Those that have been compiling credit exposure information and potential liquidity requirements from disparate systems manually, across all of their business units and subsidiaries, now find that this information is available centrally. Such accurate and reliable information not only speeds up the information flow, it also facilitates enterprisewide customer and counterparty exposure measurement and management.