Not the Home Stretch

At the recent 20th edition of financial industry trading communication association ISITC's flagship annual Boston conference, new chairman Jeff Zoller pointed out that data management, performance and reporting capabilities are being stretched further than ever before to provide data to consumers in more customized and individualized formats.

ISITC plays a big part in helping shape industry standards for messaging, and its members and officials work a great deal on data issues, advocate for certain responses to regulation and promote communications and identification standards that guide and govern securities reference data.

Before being able to "stretch" data, as Zoller observed, firms obtaining data from hedge funds and prime brokers must normalize it. This is of particular interest because of an increase in alternative investments, including hedge funds, along with REITs, private equity and exchange-traded funds. Deutsche Bank's annual investment survey projects that hedge fund assets alone will rise from $2.6 trillion at the end of 2013 to $3 trillion at the end of this year.

Before traditional managers can proceed with building operational capabilities in-house or buy systems for the new risk-based approaches that alternative investment forms demand, they must think about how they will develop data analytics capabilities, Zoller said.

Within this industry environment, identifier registration – the oft-discussed legal entity identifier (LEI) – and compliance with AIFMD, UCITS V and EMIR, to name just a few new regulatory mandates, are going to generate massive amounts of data. A single German firm's AIFMD application to its local regulators runs to 200,000 pages, as Zoller noted, and license applications in that country alone number many thousands more pages. Similarly, the industry is trying to keep up with EMIR reporting requirements that began in February, mandating unique trade identifiers based on having established LEIs, which themselves are not all there yet.

For the year ahead, the financial services industry ought to focus on gaps like these that are still out there, Zoller said. With the range of data to be collected, managed and reported continuing to expand, the systems and strategies being used or conceived to deal with it will have to at the same rate to keep up.