Michael Shashoua: Data Quality Beacon

Any data enterprise founded on the idea of making information open is likely to have an uphill battle in the financial industry, because of its competitive nature. While data consumers naturally seek transparency when it comes to sourcing data, they face a challenge created by competitive interests.

“Traders, investment firms and other financial market participants do not want to publish and share their methods,” says Frank Piasecki, president of New York-based market data provider Activ Financial. “They can be gamed and have proprietary investment strategies that need protection,” he says.

Just as the pursuit of higher quality data lowers once-firm barriers, the innovation of metadata as another piece of the reference data pie means firms have to look beyond just proprietary solutions, says Emilio Mercado, CEO of Simplified Financial Information, a New York-based market data provider. For large firms with large amounts of data to manage, the question becomes how to get a comprehensive view of data without capturing all of it, he explains. Empowering a compliance officer to simplify data can improve control, according to Peter Esler, global head of market data at Jefferies LLC. “The challenge in regulatory compliance down the road through technology is to simplify the technology,” he says.

Open for Enhancement
The balance between transparency and securing valuable information is always delicate, so data managers have to figure out how to use metadata and other technology innovations to improve the accuracy and quality of market information, while keeping key pieces of data operations proprietary.

Recently, post-trade services provider Omgeo opened up the ability to enrich trading with data from its Omgeo Alert standing settlement instructions (SSI) database, through a partnership that began last fall with its parent, the Depository Trust and Clearing Corp. (DTCC). The partnership is producing “incremental” benefits for brokers through wider use of SSIs, according to Matthew Nelson, executive director of strategy at Omgeo.

Allowing outsiders the opportunity to enhance data could actually be a third way of raising data’s quality and completeness.

Turning the SSI database into the equivalent of an open application programming interface (API), allowing other service providers to enrich data as long as they are approved by a governance committee, builds community, says Nelson.

“The benefits kick in the bigger that community gets,” he adds. “Every incremental bit we move the needle up on the size of that community, the more benefits there are for the brokers who have to deal with their client community on Alert and also with all the manual bespoke methods being used.”

Allowing Alert SSI trade data to be enriched by other contributors also fills gaps in asset classes not covered by Omgeo, such as over-the-counter (OTC) derivatives and foreign exchange (FX). Also, recently, Omgeo and the DTCC added an interface allowing global custodians and prime brokers to use the SSI database, bringing more parties to the resource.

Illuminating Results
Currently, over 90 percent of the data in the Alert SSI is compliant with industry best practice standards, according to Nelson. So there appears to be room for Omgeo’s conversion of its database to an open, shared platform to enhance the quality of the data it will contain overall. The further expansion of Alert SSI to cover more types of securities and serve more segments of the industry ought to bring it closer to 100 percent in data quality terms very soon.

The Omgeo effort provides a beacon others could follow to navigate toward higher quality data, while avoiding exposure of sensitive information. Allowing outsiders the opportunity to enhance data could actually be a third way of raising data’s quality and completeness, while retaining the integrity and security of the original information.