Front-Office Data Focus Spurs IBOR Push

The Big Question
What are the attributes of a typical IBOR system? As is usually the case in financial technology, ask 10 different people and you’ll get 10 different answers, but in this case, that’s the point. An IBOR system is a consolidated data repository that allows users to interrogate the information held inside, based on their particular preferences, with advanced event logic laid over the top. While it has elements of a data warehouse in its construction, the system itself is more complex than that.

“One of the characteristics of an IBOR is that it allows you to create many different views of the same data, depending on who’s looking at it,” says Robin Strong, director of buy-side market strategy at Fidessa. “Historically, that’s one of the things that data warehouses are terrible at—they essentially present data in a nicely defined and consistent structure. A simple example would be if you have a set of portfolios, the holdings in the data warehouse would be constant and fixed. With an IBOR, however, you’re actually thinking about the state of every component that constructs a position. There are no fixed balances held—you’re synthesizing them at the point of request from all of the transactions that qualify, depending on your view.”

Depending on the type of IBOR taken by a firm, and whether it is developed in-house or through a vendor solution as opposed to using an outsourcer, the intra-day aspect will vary. The latter model tends to take in the day’s positions and uses overnight batches, once the data has been transmitted, to perform the functions of cleaning, formatting, and standardizing ready for the next day’s trading and reporting. However, integrating disparate data sources, formats and varieties remains challenging regardless of whether the process is accomplished as close to real time as possible, or on a batch basis.

The Single Source
“From a technical viewpoint, you’re taking in many data sources, and the bigger the organization, the more relationships they have, and more integration needs to take place,” says Les Beale, product manager for investment operations outsourcing at Northern Trust. “It’s not just a technical challenge, but also ensuring that the quality, standards and interoperability of the data are robust. You might get multiple sources trying to tell you the same thing, but the way it’s presented means that it isn’t necessarily consistent in the way that it’s interpreted, so you need to have a good governance layer fitting over the top of an IBOR solution.”

The pitfalls of data aggregation are well known, and have been explored at length through other initiatives on both the buy and sell sides before. In addition to consuming and normalizing data, however, making that information available to the various systems that need to feed off it, is also a challenge.