Wall Street firms are taking a more holistic view of data management, reported several data management executives, speaking at yesterday's Data Management Conference hosted by Wall Street & Technology in New York. Several speakers emphasized the changing role of the data manager and the need to understand how data is used by the business. Reference data is the data that underlies product, price and customer setup and is the underpinning of activities from trade to settlement.
"Now we're starting to take a more holistic view and ... creating a more centralized strategy to negotiate your content with the vendor," said John White, global manager, investment management data services at State Street Global Advisors, which managed $1.2 trillion in assets, including big index funds. White maintains a central repository for all indexes, which involves scrubbing and development of new indexes. He also is building out a reference data framework. This team acts as a liaison between business and developers; the team must understand bonds, equities and derivatives, he said.
With the passage of Reg NMS -- which is going to change the way stocks are traded -- and trends like algorithmic trading impacting the front office, the data manager is expected to have a broader view and understand front-office issues, said executives. In the past, the data manager had a clerical role and was focusing more on data cleaning, sourcing information and validating data, noted White.
Today, there is talk of Wall Street firms appointing a chief data officer (CDO) -- someone who understands the business and brings disparate groups together.
"You need to understand how the business units works, where are they going with data and how they use data," said Paul Yaron, managing director and principal at Bear Stearns & Co., who spoke on "The Data Manager's Changing Role." "It's a very holistic approach. You need to have a broad set of skills. Technology is not the top skill any more," said Yaron, emphasizing that "You need to communicate with the business."
Data management is a hot issue on the Street right now," said Tom Jordan, chairman of consultancy at Jordan & Jordan, who noted that key drivers are regulation and compliance.
"The data has got a magnifying glass on it by regulators. The opportunity exists in the industry to be exposed by inconsistent data," said Yaron. So there is an emphasis on consistency of data used in risk management reports and in customer statements.
Centralization and consistency were common themes. White at State Street said the firm previously had a lot of disparate systems all over the globe managing real-time market data and reference data and was looking for a level of consistency in how data was managed. "We ended up bringing all of that together."
Several Wall Street firms represented at the conference, including State Street Global Advisors, Bear Stearns and Credit Suisse First Boston, are engaged in projects to centralize reference data. For instance, Bear Stearns has an enterprise reference data initiative under way. Because the brokerage firm had a number of disparate reference data repositories, it spent last year setting up a reference data architecture," said Yaron.
However, "For an investment bank like Bear Stearns," Yaron said, "doing a single golden copy for reference data is not really a good strategy." Instead, Bear Stearns is creating a mechanism to arrive at a level of information consistency within these centralized hubs. The idea is to publish information from the central hub and then push it out to local repositories responsible for augmenting the information, he explains. "The objective of the reengineering exercise is to make us nimble, flexible," said John Bottega, director/global head of product and price reference data, at Credit Suisse First Boston, who noted that CSFB has a reference data project underway.
Meanwhile, some firms are turning to outsourcing because they are seeking "smarter systems" or a "do-over of their architecture," said Tim Lind, director, Investment Management Practice, TowerGroup. However firms are not necessarily outsourcing all of their reference data. Lind noted that Banc of America Securities had signed a deal with SunGard Data Management for end-of-day pricing information. BAS is scheduled to announce the deal today. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio