Tokyo Diary 4

Foreign data vendors should heed centralization challenges when trying to enter the Japanese market

One discussion in particular during the Tokyo Financial Information Summit concerning centralization of data management struck me as having bearing on the points brought up in the previous Tokyo Diary entry. Foreign data vendors have difficulty breaking into the Japanese market, similar to the way some foreign financial services firms as a whole have difficulty entering this market. That difficulty can come in part from the language barrier of trading being conducted solely in Japanese.

The other challenge, as identified by Raymond Yeung, head of technology products at Nikko Asset Management, in the centralization discussion, is that providers often fail to go "all-in," and attempt to gain a foothold in Tokyo with half measures. For example, Yeung says, providers he has heard from have established offices in Hong Kong, but held off hiring Japanese speakers until they can get a Japanese client. Considering the nature of the Japanese market, this does seem like a recipe for failure.

That's even before dealing with the actual centralization issue. Hideyuki Kato, manager of the reference data management office at Mizuho Securities, shed light from a Tokyo native's perspective, advocating a third way of managing data that falls between centralization and localization. Centralizing data across a big investment firm is difficult, and local information naturally will be localized, Kato explains. What may work is a virtual centralization approach to data management that, as he defines it, bridges the gap between the localized or insular nature of the Japanese markets with a globally compatible approach.

During this very brief time spent in Tokyo around the Summit, it certainly wasn't going to be possible to discover and absorb everything there is to know about the functioning of Japanese markets, and in particular data management within them. But it is possible to get a sense that the data management challenges all tend to come down to one thing – finding respectful ways to obtain and process data and interact with business partners in the process.