Data management | Outsourcing
“Outsourcing data management can be a significant challenge. These challenges are part contractual and part practical. Buyside firms don’t regard themselves as data providers or manipulators, but they will be relying on third parties to do this.” Rob Boardman, ITG
brought back into a single place – an investment data warehouse.” One reason buyside firms have begun to
outsource data management is that they under- invested in data during the boom years, when money was channelled into enterprise and order management systems, says Simpson. “Solutions tended to be built on a point-to-point basis. This no longer works, particularly as regulators want more timely information.” Stephen Engdahl, senior vice-president,
product strategy at GoldenSource, an enterprise data management vendor, says: “The point-to- point approach created problems, particularly with reconciliation and also traceability. Firms couldn’t often answer the question, ‘where did that valuation come from?’.” He believes some firms have outsourced too much, with multiple global custodians, fund administrators and other parties handling different parts of their books. “These firms cannot gain a single view of their
position on an intraday basis. They recognise they need more discipline in order to track, from end to end, where the data has come from, all the way to the downstream consumers of data. If they do this, then they will be able to provide clean positions into their portfolio management systems.” Outsourcing data management can be a
significant challenge, says Rob Boardman, chief executive, EMEA of independent research broker
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ITG. “These challenges are part contractual and part practical. Buyside firms don’t regard themselves as data providers or manipulators, but they will be relying on third parties to do this. There are questions to be asked – if a firm changes its OMS or PMS, will the data vendor load its data on to the new system? There are data licensing issues for buyside firms; can the data be mingled or used for different purposes. When you pay for data it doesn’t always become yours – some licences are very restrictive.” It is important for investment managers to
govern their organisation and IT systems to assure data quality for investors, according to Yasutoshi Kaneko, general manager at systems integrator Nomura Research Institute. “In Japan, data vendors provide high quality data and also operational quality at financial institutions is very high to produce high quality data. However data governance is still a challenge; quality data exists at the firms but often it is not accessible to everyone or it is difficult to locate the golden copy, for example. For this reason, firms are showing more interest in outsourcing their data management process in Japan.” Marc Alvarez, senior director, reference data infrastructure at Interactive Data, says a number of fundamental changes have occurred in the data management arena. First, overnight batch approaches are disappearing. “People are used to
Best Execution | Summer 2013
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