Out With The Old, in With The New

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Stories covering AIFMD, IFRS 13, phase-out of old data management processes, JP Morgan's data restructuring and possible open source LEI all point to key changes that have happened in the past month for the industry

This month's issue of Inside Reference Data tracks a few key developments that transpired at the close of 2012 and during the first few weeks of 2013. Long-awaited measures of the Alternative Investment Fund Managers Directive (AIFMD) were issued by the European Commission on December 19. The International Financial Reporting Standard (IFRS) 13 took effect January 1. And respected financial data industry figure Ken Price changed gears, going from the DTCC-owned Avox, which he co-founded in 2002, to a new start-up, Strevus.

Since AIFMD prescribes methods for calculating performance metrics including assets under management, leverage and liquidity, some fund managers will have to change their methods, HSBC's Paul Ellis says in No Alternative to Harmonization. For those who have to change their calculation methods, changes to reference data infrastructure will also be necessary. That, in turn, leads to a need for robust data normalization. The harmonization alluded to in this feature applies to linking front, middle and back offices, as well as sources of data. With the European Union expected to get AIFMD encoded into its nations' laws by July 22, there's not much time left for those who aren't already prepared.

Beyond Europe, in the global standards arena, IFRS 13 obligates data consumers to push for transparency into the prices they get from third-party providers. This requires understanding of those providers' methodologies and data inputs, among other things. User requests for these details will increase, says Matthew Berry of data provider Markit, in the story IFRS 13 Driving Level 3 Coding Work.

Avox began as an effort to address data quality issues, and in Ken Price's latter years there, following its 2010 acquisition by the DTCC, the company became instrumental in preparing the utility for assigning legal entity identifiers (LEIs). Having been involved in key changes in reference data before, Price aims to do so again by bringing "Silicon Valley innovation" to bear with another start-up, Strevus. His new company is considering the place for social media data and big data in reference data, a topic Inside Reference Data has raised before and continues to follow.

What do all these changes mean? Social media may certainly be a new source of financial reference data, but convergence and centralization in data services are also desired. JP Morgan considered the organization of reference data important enough to implement a restructuring of its operations. The developments covered in this issue show that there are many potential ways to organize reference data operations, including new innovative ones. There are also many potential sources of reference data to reconcile and check. This will certainly make navigating reference data more challenging as the year progresses.

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