Data management | Outsourcing


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ncreasingly onerous regulatory reporting requirements are driving up investment in data management technologies among buyside firms.


Two recent studies indicate buyside firms will be spending more on data management in the coming years. US-based data quality management firm


MoneyMate says 85% of respondents to a survey it conducted earlier this year are investing in new technologies for data management. Client service and regulatory compliance were cited as the driving factors behind the new investments. Another survey, conducted by financial services analysts Aite Group, estimated that global spending on data management would reach $1.71bn by 2014. The survey, released in mid-2012, identified a rise in data quality improvement projects, driven by a need to improve the management of buyside firms’ businesses, regulations and risks. “While financial services firms have traditionally


sought to keep data management technologies in-house, outsourcing is becoming an increasingly attractive option,” says Virginie O’Shea, senior analyst with Aite Group and author of the report. “For firms open to partnering with a vendor, numerous flavours of data management solutions are available, depending on the required functionality and desired deployment model.” Firms are seeking high-quality, relevant data


delivered in a timely and cost-effective manner. The requirement for data permeates all aspects of the investment process, including investment decisions, trade execution, securities pricing, risk management, regulatory compliance and portfolio valuation and measurement. While regulators are stipulating more detailed reporting, clients are also upping the ante when it comes to the sophistication of reporting. These requirements are


Best Execution | Summer 2013


being compounded by increasing volumes of data. Add to this a very crowded market, the Aite Group report assessed 24 different data management solution vendors which is an indication of the potential of the market but also of its complexity.


Blotted copy Approaches to data management have changed during the past decade. The appeal of a ‘golden copy’ – a single version of the truth – has faded away. “The reason the golden copy approach failed was that data management vendors were trying to create a single version of the truth that would solve everything,” says Daniel Simpson, managing director and head of Markit Enterprise Data Management (EDM). The company’s platform acts as a central hub to manage the acquisition, validation, storage and distribution of data in a consistent, fully-audited environment. “We recognise multiple versions of the truth, which is fine as long as users can trace the information and see how they arrive at a certain point.” Golden copy projects, which were time consuming and expensive, simply created another silo (the golden copy warehouse), he adds. Data warehouses gained a bad reputation, says


Julian Webb, global head, data management and analytics at DST Global Solutions, because building them was “very difficult to do”. However, firms are beginning to refer to data warehouses again, particularly large buyside firms that trade across multiple asset classes. “Firms that are running multiple investment accounting systems and that have many outsourcing relationships do not have a single place from which to view their positions across the business,” he says. “But regulatory requirements mean they have to get an enterprise view across the organisation. Data needs to be


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