Data management is a complex challenge. When searching for a data management solution, what are you looking for? Among financial services firms, there is no universal problem-solution scenario. At Asset Control, we find that the reasons triggering these projects are extremely varied.
Our customers have purchased our software for purposes that include arbitrage, index management, performance measurement, security master and STP, market risk management, pre-trade investment analysis and forecasting. These firms intended to improve data access for a single line of business, such as a derivatives-trading operation, or build an infrastructure to support global data consistency. They sought to save money, increase capacity or relieve bottlenecks and operational breaks.
In all of these varied experiences, we have discovered one commonality beyond the obvious need for reliable data. After implementing the system, our customers discovered that the availability of cleansed and consolidated data created additional opportunities for its use. Trading room analysts requested data originally consolidated for a risk department. Data for portfolio analytics attracted the interest of risk managers. A security master was extended to more applications for a straight-through-processing initiative.
Investments in data management are different from most other technology investments in this way. They are leverageable. Or they should be. In addition to the reasons above, the single most important reason for installing Asset Control is that existing systems will not support current or upcoming business requirements.
The need for additional scalability, extensibility to new purposes or even the ability to incorporate new data types into an existing system are all issues that arise when business needs change. Adding new types of instruments, addressing new regulatory requirements, or seeking new efficiencies or reductions in risk stresses incumbent systems that were built for more limited purposes.
When the existing systems are extended beyond any reasonable approximation of efficiency, they typically demand more manual processing and technical attention. The objective in replacing them is not simply to address the immediate issues, but to invest in the future.
Most of our customers replace systems that were developed in-house. Often we compete with in-house development teams for the project. When we win, it is because the firm chooses to buy expertise, including the track record of a proven solution, the ability to test and use a finished product in months instead of years, and the access to a development team that is solely concerned with data management technology.
What might seem to be a "defeat" for the in-house team actually offers advantages relatively quickly. By removing the need to develop core infrastructure technology, the developers can move forward to more visible and rewarding projects. For example, our tools enable development of proprietary analytics, desktop and Web-based user interfaces geared to business roles, and linkages to applications and international operations.
The Capacity Connection
Investment-related data is pervasive across business lines, software applications and global operations, and building consistency is a progressive operation. It begins with a core functionality, such as our AC Server, that can gather and process multiple data feeds " external and internal "creating cleansed and consolidated "golden copy" as the reference version for the firm. Application interfaces and middleware then serve to bi-laterally synchronize data updates between the core platform and the various databases serving applications and other operational divisions.
Centrally managed, distributed data architecture offers immediate advances in volume capacity, reduced overhead and increased work capacity, especially in reduced manual processing, and increased efficiency with the reduction of process breaks caused by data conflicts. Another capacity that becomes apparent over time is the appearance of new opportunities for using the data at hand.
These opportunities are shaped by the categories of data that are managed in the centralized system, as well as how comprehensively the data model manages dependencies and relationships. In our case, the AC Server handles and integrates tick and time-series price data, instrument and issuer descriptive data, corporate actions data and economic data. Counterparty and settlement data are currently being incorporated into the data model.
The Solution Pyramid
The definition of a data management solution depends on how much data management is already in place. The first level of challenge is core data management " gathering, validating, normalizing, cleansing and consolidating. Whether the initial need is support of a risk management engine or the ability to support multiple applications for straight-through processing, this is the solution that makes other solutions possible.
The second level of solution leverages that data management horizontally across the organization, extending this reliable, high-quality data to additional data types, users, applications and geographies, while establishing consistency in its path. Extending the data from risk management to trading-room analysts is one example. Adding counterparty data and price data to a core system originally developed to manage security master data, in order to support counterparty credit risk, is another.
The third level of solution is next-generation applications that exploit the data in new ways. Using financial libraries or capitalizing on the formula-building tool for proprietary data enrichment and manipulation, users can rapidly create new forms of record-keeping, decision support, and reporting for business and compliance. Our customers make use of a suite of tools to create server-level, desktop and Web-enabled applications to extract more value from their data.
Whatever the "problem" that triggers a search for new investment data management software, the solution should deliver an immediate solution and a long-term host of opportunities to run the firm more efficiently and intelligently. The ubiquity of investment data, while often viewed as a central difficulty in streamlining operations, also offers rich potential for leveraging any investment into increasing value to the firm.
Asset Control ( www.asset-control.com) is a leading provider of in-house and outsourced investment data integration technology to capital markets firms. Asset Control has offices in New York, London and the Netherlands.