Centralization Takes Center Stage

Centralization, in all its forms, is becoming the name of the game for reference data.

That's evident in the growing attraction of the investment book of record (IBOR) as a way of obtaining a more accurate view of portfolio positions. IBOR borders on being a market data system-it provides real-time access to positions, consolidating implied orders, executed orders and confirmed trades. What firms are looking for when they set up and use an IBOR is "one version of the truth," as SimCorp's John Mayr tells us in this story. That can be done by placing a database centrally so it supports the front, middle and back offices all at once. And an IBOR can be used to aggregate data from myriad sources or track independently created positions. Either way, it centralizes data for reference.

The focus on centralization also appears in some of this issue's news stories. The Depository Trust and Clearing Corporation (DTCC) is working with global banks to encompass legal entity hierarchy, know-your-customer and other compliance-related data. The industry has deliberated at length on how to manage legal entity and know-your-customer data. Combining and co-ordinating these data sets could ensure greater accuracy in each realm.

On another front, the DTCC is partnering with Omgeo to collect standing settlement instructions for all products and regions into the Omgeo Alert database. According to Omgeo's Mark Bouchea, broker-dealers want their clients to use the centralized Alert web-based database. In this case, the firms themselves are pushing for greater use of centralized data.

Integration of information is also a matter of concern in compliance efforts for the Foreign Account Tax Compliance Act. HSBC's Jacklyn Osborne points to a major challenge in aligning counterparties and products to support classification of securities as taxable under the US anti-tax-evasion regulation.

Last, but not least, as we heard at the European Financial Information Summit in London near the end of September, senior data executives have been clamoring for a consolidated pre-LEI file. They may just get it if the pre-LOUs now accepted by the global LEI system prove to be consistent and effective.

But with all these efforts to centralize data, everyone should consider where the data is coming from. In a recent online column, "The Origin of Data," I reflected that data operations executives are considering or even implementing initiatives to channel data directly from its sources, namely issuers. That ought also to increase data accuracy and, in turn, build a more accurate store of data to reference. This idea-picking up data from its original source-could also be included in any of the efforts to centralize and integrate data. When the dust settles on the current set of new regulations and initiatives, it should be.