Michael Shashoua: Momentum Booster

Momentum is building in data management for centralizing and coordinating data, partly driven by regulatory imperatives and partly by firms' own realizations about their investment management needs. Is the industry capable of centralizing data, however, if its data infrastructure is as out-of-date and inadequate for aligning data, as EDM Council managing director Mike Atkin cautions?

Citi and JPMorgan, among other firms, have data centralization strategies in place or underway particularly for legal entity identifiers (LEIs). JPMorgan set up a central location for LEIs, especially to link these identifiers to client and issuer data, according to Robin Doyle, managing director, office of regulatory affairs at JPMorgan Chase, who spoke at last month's North American Financial Information Summit.

But will the foundation for efforts to align and centralize data come from harmonization initiatives like ones the EDM Council supports, or from those aforementioned regulatory drivers?

Atkin characterizes harmonization as aligning data properly with its true meaning. That is achieved, he says, by addressing inconsistencies in the identification of instruments, entities and deal terms, then reconciling those differences. This means simplifying and understanding the critical element of the data, says Atkin. "Much of the industry is putting its energy into unraveling the complexity of processes," he says.

Harmonizing Data

Data management as a whole is really "about managing the content," says Atkin's colleague, John Bottega, a senior advisor and consultant to the EDM Council and principal at Data Management Advisory Services. "Data management is also about unambiguous shared meaning across our operations so we understand the essence of the data and allow technology to be the all-important enabler."

Harmonizing data and getting consistent data as a result is a pre-requisite for data glossaries, transformation processes, identifiers and especially ontologies like the EDM Council and Object Management Group's own FIBO. As Bottega also says, the industry is "pretty good" at capturing, processing and moving data, but not as good at understanding the meaning of it. To extract more meaningful data, more movement of data between silos within firms is necessary, says Ed Ventura, president of Ventura Management Associates.

"Companies that cross-pollinate those silos can leverage the work that they're doing on the compliance side," he says. "Part of data governance is getting people to talk to one another."

The industry is “pretty good” at capturing, processing and moving data, but not as good at understanding the meaning of it.

The Compliance Piece

As Ventura points out, compliance also justifies centralization and harmonization efforts. More regulatory demands are coming soon, with recent actions by the European Securities and Markets Authority (ESMA) to centralize data and by the Depository Trust & Clearing Corporation (DTCC) to align swaps data to better support analysis. ESMA's Trade Repositories Project, planned for the second half of 2016, promises a single access point to data into those repositories.

For both Europe and the US, the DTCC's Marisol Collazo calls for a global standard for trade identification that will "resonate" for all jurisdictions, to include a definition of data quality across firms, repositories and regulators, and be supported by data aggregation efforts. The DTCC, for its part, is aligning swaps data to get better analysis, and therefore feed higher quality data into aggregations.

Consolidating, centralizing and harmonizing data reaches into so many aspects of how financial firms operate that it's no wonder concerns about centralization and alignment of data ─ compliance-based or otherwise ─ are increasing the industry's momentum to do something about that.