Data Services £ 10 - UK, ROW

$20 - Americas
15 - EMEA

Market Guide 2010

Good data, good savings

ISJ Data Survey inside

DSMG2009_cover.indd 1 16/04/2009 16:58

 Investor Services Journal | DataSe rvicesMar ketGu ide2 010
T he financial data and technology industry
has witnessed an unprecedented overhaul
in the capital markets, changing the outlook of
many of its banking clients, with further regu-
lation to come.
In doing so there has been a shift from an
emphasis on assets to that of liabilities – ‘what
could be lost?’ rather than ‘what money could
be made?’ Corporate governance issues, the
transparency of operations, and the ‘account-
ability’, perhaps, of how banks and other insti-
tutions justify its trading choices, are all fight-
ing to emerge top of priority lists around the
world.
The data services industry will be able to
provide some of the solutions. Financial insti-
tutions have been looking to stem the outflow
of capital – either through losses or investor
redemptions – and conversations with soft-
ware developers will more frequently than not
boil down to cost saving. Amid a number of
articles that touch on this area, Andreas Glat-
ter of Ecofin explains the numbers game of
good systems and good data (p 32). He makes
a powerful case for the centralising of data,
particularly in the context of declining staff
numbers. The insistence that management
must ‘get the message’ of needing the right, ac-
curate data to drive a business I’m sure will be
echoed around the industry.
DSMG 2009 1-21 b.indd 1
Editor’s Letter
An important consideration is that innova-
tion in the finance industry will not stop. Just
as a lotus can emerge spotless from murky
water, new ideas will eventually drive the re-
turn to profits. The outsourcing of middle and
back office functions is one such innovation
that has emerged, potentially suiting firms of
all sizes in the transference of data operations
to trusted specialists and further depressing
costs. Pramod Gupta of HCL Technologies,
Geoff Harries of Fiserv and the panellists in
our market debate thoroughly expound upon
this service offering.
Amid the reconstruction, open lines of
communication between regulators, commit-
tees and institutions must remain open. In this
light, Bob Cumberbatch of Interactive Data
explains the good work done by associations
to work together towards industry standards,
as well as the collaboration of data vendors
themselves (p 39).
Few have any clear idea what the new struc-
ture for operations and regulation of finan-
cial institutions will look like. But this guide
contains many pertinent articles – penned by
industry insiders with a wealth of experience
and knowledge – that describe how the foun-
dations are to be laid. n
Ben Roberts, Editor
16/04/2009 15:18
 Investor Services Journal | Data Services Market Guide 2010
Foreword
The pendulum swing of innovation
Stuart Calder of Linedata Services
T
he concept of
enterprise data
management
(EDM) has absolutely
taken off; however
the reality is not yet
being achieved. Firms
are spending far too
much on maintenance
of existing technology projects rather than
initiating projects that would help the organi-
sation to be much more efficient in the way
they manage content and data and therefore
enable them to execute their business strategy
efficiently and as designed.
EDM is a solution that will quietly sim-
mer away water for many years to come even
though it’s the nirvana solution firms need as
they battle against increased data volumes and
niche content requirements from specialist
systems. The need for EDM will only increase
over time as more people require access to
more granular and higher frequency data and
current niche data requirements become stan-
dardised across the organisation. The require-
ment for EDM absolutely exists, but there are
a fairly insignificant number of projects trying
to achieve this at the moment.
Historically, firms had little understanding
of the granularity and in-depth detail of assets
and complex securities required and as a result
created specialised siloed platforms that didn’t
let data flow across the organisation properly.
By having a centralised data management
system, firms can ensure the quality and real-
time availability of data is managed effectively
and data is understood in a much more intel-
ligent way. As a result, particularly during the
current economic situation, better decisions
will be made.
Rather than investing in EDM, firms are
spending their budgets on reducing latency
and improving efficiency to move data around
DSMG 2009 1-21 b.indd 2
the organisation. Sybase is working with firms
to add new technology to traditional systems
to both manage the ever-increasing volume of
data whilst also achieving efficient data flow
in real-time. By providing scalable technol-
ogy Sybase is both helping firms to improve
their existing systems whilst at the same time
providing a framework that shows there is
an opportunity to achieve more of an EDM
capability.
“The pendulum between
business driving IT
strategies and IT driving
business strategies has
swung back and forth ”
Over the past twenty years, the pendulum
between business driving IT strategies and IT
strategies driving business has swung back and
forth. In a time of reduced IT spending the
emphasis is now moving towards a focus on
technology driving business. Sybase is seeing
firms recognise that their previous business
models were hampered by technology not
being able to cope with the changing market
demands. If these same businesses are going to
progress, it means a change to their business
model with technology facilitating success.
Firms however are not going to hedge their
bets on new, unproven technology; but rather
look to vendors with proven-track records in
Financial Services, such as Sybase, to provide
technology that they can be confident will
help achieve current and future business
objectives. With larger vendors, firms will have
the advantage of using technology that can be
implemented in one department or scaled to
an enterprise level. This ability will provide
firms with strategic, long-term partnerships.n
16/04/2009 15:18
DSMG 2009 1-21 b.indd 3 16/04/2009 15:18
 Investor Services Journal | Data Services Market Guide 2010
Foreword
Mike Atkin, EDM Council
Regulatory Oversight:
The Devil is in the Data
Michael Atkin, Managing
Director, EDM Council, Inc.
T he current angst extending from turmoil
in the financial markets is perhaps
the best thing that has ever happened to
data management. Of course, we wouldn’t
wish these problems on anyone, but as a
result of systemic failure, we’ve learned two
valuable lessons that portend well for data
management.
The first is that financial institutions are
predominately focused (now and always) on
short term profitability. That’s the nature of
the financial institutions. The second is that
the regulatory environment doesn’t currently
reflect the true nature of how global business
operates. It clearly needs to be restructured in
order to provide oversight and keep markets
in balance. And this is not really a secret.
4
DSMG 2009 1-21 b.indd 4
The problems of dealing with complexity
and global interconnectedness have been
documented in every regulatory report over
the past five years.
All of these reports, from Giovaninni
to G-30 to BIS Report on Payment and
Settlement to the recent Treasury Blueprint
for Regulatory Reform all basically say that
financial processes are interconnected in
ways that we haven’t experience before and
that they can be undermined by lapses in
data, operational processes and systems
dysfunction. In essence, these reports all
concluded (and we ignored) that it’s not a
matter of “if ”- it is a matter of “when” - we
are going to experience a systemic crisis.
The real issue is not why we experienced a
crisis; it is how to prevent it from happening
again. But I don’t want to get too far ahead of
myself. Let me set the stage of where we came
from at the beginning of 2008 and where I
think we’re headed in 2009.
16/04/2009 15:18
 Investor Services Journal | DataSe rvicesMar ketGu ide2 010
Finger on the Pulse
The EDM Council did some research
early last year to characterize the current
state of data management within financial
institutions. The bottom line was that it was
rising rather nicely. Projects were underway.
Data groups existed. And progress was being
made. The truth however was that most firms
were managing data tactically. Data had been
reduced to just another task to accomplish
and subject to the whims of cutthroat
competition for resources and attention.
Executive management generally viewed
data management as a low level concern and
a necessary evil. It was required to keep up
with the pace of business and the mantra was
“do it fast and do it cheap.” Unfortunately
if top management doesn’t take ownership
of data, the philosophy cascades throughout
the organization and reinforces silo operating
models - making it difficult to manage
politics and rewarding tactical workarounds.
Business users clearly understood the value
of data that was “fit for purpose” but they
didn’t invest time to peel back the layers of
the onion as it related to the details. They
paid attention to data when there was a
problem. Business management generally
took a narrow and functional view of data
management which hid the problems
associated with the interrelationship of
processes.
Data management was stuck dealing with
the huge backlog of problems that existed,
putting out brushfires and dealing with
immediate challenges. Most data groups
were reactive. And when they were not
dealing with the “crisis du jour” they spent
their time justifying their existence, begging
business units for funding and dealing with
the challenges of organizational politics.
The bottom line is that the data genie was
out of the bottle, but we’re still operating the
way we are used to operating. We just had
another project added into the mix.
What’s Different Now
DSMG 2009 1-21 b.indd 5
Foreword
The ways things have unfolded suggest
that the goals of data management are now
goals shared by the regulators – making the
business case a whole lot easier. We’re all
coming to the realization that firms can’t
report and justify and regulators can compare
and analyze without the data being right.
Not that it’s a surprise, but prepare for
more regulation. It’s inevitable and the result
of proving that you still can’t be trusted.
Unfortunately, regulation isn’t the objective
from my perspective. Regulation is a law
enforcement response and the price we pay
for our greedy sins.
But in addition to regulation, we should
be preparing for principles-based, global
oversight. That’s the gap in the regulatory
environment. The current regulatory system
was created in the 1930’s and is not able to
deal with the diversity of market participants,
the complexity of financial instruments,
the convergence of trading platforms or the
nature of global interconnectedness.
This new regulatory oversight regime
won’t get caught sleeping at the wheel again.
That means an increasing focus on systemic
and operational risk (including global
counterparty and exposure management).
More requirements related to hierarchies
and links. More transparency on pricing and
valuations. And automation of payments
and settlement processes.
There will be more ad hoc reports about
activities … about groups of trades … about
positions for specific counterparties … and
about relationships between investment
activities. And you will need to slice, dice and
reconnect according to multiple scenarios.
That means cross-vendor comparisons,
alignment of internal repositories and
enhanced corporate actions processing to
be able to unravel the multiple issuer → issue
→ obligor relationships to get a clear and
consolidated view of risks and exposures.
All of these processes are data dependent. n
5
16/04/2009 15:18
 Investor Services Journal | Data Services Market Guide 2010

Contents
Supplement editor:
Ben Roberts
(ben@2ipartners.com)
Features
Web design: Peter Ainsworth
(peter@2ipartners.com) 8-9 Investor Services Journal’s Data Vendor Survey

Senior account manager:

Trish De La Grange
Counterparty Risk
(Trish@2ipartners.com)
10-12 Do You Know Who You Are Dealing With?
Account managers:
Mark Needham
(Mark.Needham 14 Are You Exposed?
@2ipartners.com)
Tarik Rekiouak
(Tarik@2ipartners.com) Outsourcing

Business development
manager:
16 The Outsourcing Phenomenon
James Olweny
(Sue@2ipartners.com) 18 Merger Update: A Restructuring Case Study
Commercial director:
Jon Hewson 20 New Architecture In Light Of Regulation
(Jon@2ipartners.com)

Operations manager: Panel Debate

Sue Whittle
(Sue@2ipartners.com)
22-30 Panel
CEO: Mark Latham
(Mark@2ipartners.com) 32 Data - Bettering The Bottom Line - Cost Implications
Investor Intelligence partnership
16-17 Little Portland Street 35 Time For SaaS - Speed OF Change
London W1W 8BP
T: +44 (0) 20 7299 7700
F: +44 (0) 20 7636 6044 36 Not Worth The Gamble - Risk Management
W: www.ISJtv.com
39 Working Together Through the Annus Horribilis

- Vendor Collaboration

43 Market Comment - Unisys

© 2009 2i Media plc. 44 Keep The Customer Satisfied - Operations

All rights reserved.
No part of this publication may
be reproduced, in whole or in
46 Company Profiles
part, without prior written
permission from the publishers.

ISSN 1744-151X.
Printed in the UK
by Pensord Press.

DSMG 2009 1-21 b.indd 6 16/04/2009 15:18

DSMG 2009 1-21 b.indd 7 16/04/2009 15:18
 Summary Prepared on 04/15/09

Investor Services Journal | Data

This report Services Market
summarizes 4 of 17 Guide 2010
total responses.

Survey
Summary for the results with the following restrictions:
Investor Services Journal: data vendor survey
Response Filters
Invitation Type: invited
Investor
Status:
Alerts:
all Services Journal conducted a survey of the leading data providers
and
Email developers as a precursor to the features in this guide. Here are the
Contains:
results of their responses.

Question 1: How have the proposed cut-backs in the spending by fi-

Data Services
nancialMarket Guidein technology acffected your business [projections
institutions
this year?
1. How have the proposed cut backs in the spending by financial institutions in technology affected your
business projections for this year?

66.6%
66.6% b)b) to some
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(1) (1)
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2. A unified system of data management and information feeds has been cited as a major challenge to adopt
in the past. How much do you perceive the idea of a bank operating in silos (ie, separate departments that
Question
rarely, if ever, share data) as2: A unified
a remaining system
problem of prospective
among your data management
customers? and information
feeds has been cited as a major challenge to adopt in the past. How
much do you perceive the idea of a bank operating in silos (ie, separate
departments that rarely, if ever, share data) as a remaining problem
among your prospective customers?
100.0% a) very much (3)
0.0%
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3. A report by Celent found that continents such as Asia are a long way behind Europe and North America in
Question 3: How much will your business plan for this year involve
the uptake of data systems. How much will your business plan for this year involve entering new markets to
seek opportunities?
entering new markets to seek opportunities?
100.0% a) very much (3)
100.0%b) to a some degree, but wont dominate our
100.0% 0.0% plansb)(3) b) to a some degree, but wont
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4. How much will the collaboration of vendors that have a mutual client be a growing part of the industry in
theAnext
3. fewbyyears?
report Celent found that continents such as Asia are a long way behind Europe and North America in
8
the uptake of data systems. How much will your business plan for this year involve entering new markets to
seek opportunities?

DSMG 2009 1-21 b.indd 8 66.6% b) to some degree (2) 16/04/2009 15:18
33.3% a) to a great degree (1)
100.0%b) to a some degree, but wont dominate our
 Status: all
Alerts: Summary Prepared on 04/15/09
Email Contains:

Investor Services Journal | DataSe rvicesMar ketGu ide2 010

This report summarizes 4 of 17 total responses.
Survey
Data Services
Summary Market
for the results Guide
with the following restrictions:
Question 4: How much will the collaboration of vendors that have a
Response Filters
1. How havemutual
the proposedclient beinathegrowing
cut backs spending by part
financialof the industry
year?
institutions inaffected
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Invitation Type: invited
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66.6%66.6% b)b) to some
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Data Services Market Guide
2. How
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by financial been citedinastechnology
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2. A unified system of data management and information feeds has been cited as a major challenge to adopt
in the past. How much do you
Question 6: perceive
Pleasetheenter
idea of athe
bankimportance
operating in silos (ie,
cus- thatseparate
youdepartments
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rarely, if ever, share data) as a remaining problem among your prospective customers?
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management
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Question 7: Amid global reviews of financial regulation, there are

strong signs that some areas will move from a principled based ap-
proach to firmer legislation. How much will this- directly or indirectly
- affect the provision of data management?

100.0% a) very much (3)

0.0% b) still occasions of silos (0)
100.0% 0.0% b) to some degree (3)
c) not at all (0)
0.0% a) to a great degree (0)
0.0% c) not at all (0)

3. A report by Celent found that continents such as Asia are a long way behind Europe and North America in
the uptake of data systems. How much will your business plan for this year involve entering new markets to 9
seek opportunities?

DSMG 2009 1-21 b.indd 9 16/04/2009 15:18

100.0%b) to a some degree, but wont dominate our
 Investor Services Journal | Data Services Market Guide 2010
Counterparty Risk
Do you know who you’re dealing with?
Tackling counterparty risk and
insuring correct oversight of
trading partners is not possible
without the right data system
F or many risk managers in today’s market,
the pressing issue is not the need for
counterparty risk management – this is well
understood. Nor is it the need for technical
methodology – there are more algorithms
and risk engines on the marketplace than
there are banks to apply them. The most
important need is clean, timely data on
which to base their analysis. And because
OTC derivatives introduce counterparty risk
into the equation, firms need better tools to
monitor and manage counterparty risk.
This is easier said than done. However
existing data management solutions can
plug the common gap in enterprise risk
architecture by enabling a data-centric
approach to risk.
10
DSMG 2009 1-21 b.indd 10
Cleanliness is next to Godliness
The use of risk management methodologies
in the standard operations of financial
institutions has led to accelerating demand
for more and more market and reference
data, covering a broader range of markets at
a higher level of detail and accuracy – and
the associated costs in time and resources are
growing.
There is a simple reason for the primacy
of data collection and management issues
when considering risk management systems:
garbage in, garbage out. If the data you put
into your model, enterprise-wide or not, is
wrong or out of date, the analysis produced
will be wrong or out of date. Essentially
your organisation is steering either while
blindfolded or while looking into the rear-
view mirror.
Data consolidation and referencing
What makes this issue all the more
frustrating is that many banks have the
data that they need to work from – but
16/04/2009 15:18
 Investor Services Journal | DataSe rvicesMar ketGu ide2 010
it is simply strewn throughout the
organisation, held in different systems, or
on different pieces of paper in different
buildings, or in different formats even
within the same information system.
Data collection and systems initiatives
emerge from one part of the organisation
without thought of their use to other
parts, or to the strategic data management
capabilities of the bank as a whole.
Moreover, when data is stored, it is
too often kept without reference to the
relationships which turn that data into
information. For instance, credit data
on particular customers is held by the
accounting department without reference
to the information that is kept on these
customers by trading desks for marketing
purposes. Or data from different settlement
systems is left unconsolidated, leading
to unwarranted credit and operational
exposures, simply because the data is
collected and analysed on a unit by unit
basis – rather than working from a common
data source.
Market data collection processes hold
their own perils. Different market data
providers have different standards, each of
which needs to be integrated with internal
systems in a way that enables the market
data to retain its accuracy, while still being
aggregated up to enterprise level using
valid relational rules and comparisons.
Often, market data from one part of
the organisation will show significant
discrepancies when compared with the same
data used in a different part of the same
company, simply because the source of that
data was a different external system, or a
different time zone or language.
These external interfaces are made all
the more complex when combined with
internal data production, collection and
storage. General ledger, profit and loss
accounting, mark-to-market reporting
requirements; each of these has unique data
DSMG 2009 1-21 b.indd 11
Counterparty Risk
“It will not be possible
for one institution to be
running different data
management systems
for each of the func-
tions that need data”
collection and analysis needs. Positions
and balances – continually impacted by
transaction events – and their relationship
to general ledger reports and summaries,
and atomic level information such as trade
dates, prices, trader fees and counterparty
data, are crucial to an organisation’s ability
to roll-up and drill-down through trading
data to find information that is essential
for an understanding of the company’s risk
position.
In most banks, the general ledger requires
information from different information
systems, but transaction systems are
product specific and the data produced is
inconsistent. Moreover, the general ledger
is not built to store transaction details.
The result is that the general ledger is
overloaded, and requires enormous manual
reconciliation. What’s more, the final result
is separated from the information used
to build it – thus any further analysis is
rendered impossible and the general ledger
is separated from any further strategic use
it may have. Ideally, transaction data needs
to be pulled from individual product-based
systems and transformed into a consistent
validated information standard that creates
consistent data between product and
accounting systems.
Once again, these interfaces are made
significantly more complex when combined
with the need to integrate external market
data sources and transform external market
information into internal information.
When developing mark-to-market reporting
11
16/04/2009 15:18

Investor Services Journal | Data Services Market Guide 2010
Counterparty Risk
requirements, external market data must
be combined with internal transaction
information to produce consistent flows of
data useable in accounts and general ledger
work.
Too often, banks’ data management
capabilities trail significantly behind
operations – creating additional technology-
induced operational risks. These risks can
be avoided, but organisations must take a
proactive approach to the scale economies
available to them by implementing an
intelligent and strategically focused data
management system.
Data collection for risk analysis
If data is the key issue for the development
of risk management, risk managers must
ask themselves how well developed their
data management strategy is. One serious
issue when developing a data management
strategy is the extent to which the system
will be open – how flexible is the system
at absorbing and disgorging different
types of data to and from different types
of systems. With many risk management
analytics systems, the database is integral
to the system. This often means that it
is impossible to support products and
actions which are not integral to the risk
engine’s database itself: risk managers
lose the opportunity to utilise different
risk engines for different analysis because
the data is held in the proprietary
database of a particular risk engine.
The diversity of middleware, data import/
export and database management system
interfaces demanded by risk analytics
engines is baffling. What this diversity
means is that many organisations first
select the risk engine that they are going to
use and then interface back into the data
environment that the risk engine needs.
This is undoubtedly the wrong way to
do things. The more robust method is to
develop a timely, accurate and consolidated
data structure which can be drawn on by
12
DSMG 2009 1-21 b.indd 12
EA-191
whichever risk engine the risk manager,
or indeed other bank functions, wishes to
employ.
In the end, it will not be possible for
one institution to be running different
data management systems for each of the
functions that need data. It simply makes
sense for data management to become an
enterprise-wide strategic function from
which risk analysis, accounting, audit,
economics, operations research, and other
critical functions can be run.
Time issues
In an ideal world, funding and risk would
be managed through a real-time
consolidation of all current and anticipated
cash and positions and integrated with
accurate market and counterparty risk data.
Almost by definition, maintaining a real-
time stream of constantly updated, clean
and accurate data is the only way to close
the gap between actual and known liquidity
and exposures. This information needs to
be continuously derived from transactions,
market data feeds, and customer/
counterparty updates that are drawn from
multiple disparate systems – as discussed
above – without manual intervention or
batch processing.
For most firms, however, real-time
counterparty exposure management
remains an ideal. Most firms rely on manual
efforts or out-of-date sources to construct
counterparty credit ratings and corporate
hierarchies. The extra step of linking
this improved counterparty risk data to
transactions and positions in real-time can
take hours or days. For many risk scenarios,
this is too little too late. Establishing a
firm footing for all critical data sets and
integrating then in real-time is however
not a fantasy – it is what enterprise data
management solutions can deliver – and
mitigation of counterparty credit risk is
just the latest high-profile application of its
transforming potential. n
16/04/2009 15:19
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DSMG 2009 1-21 b.indd 13 16/04/2009 15:19

 Investor Services Journal | Data Services Market Guide 2010
Monitoring Exposure
Are you exposed?
Data warehousing has strengths in assessing counterparty risk
F or all businesses operating in investment
markets today, it is imperative to have a
proper understanding of counterparty ex-
posures. Managers at investment firms need
regular and frequent supply of such infor-
mation as well as the ability to obtain snap-
shots on demand, accurate to the second. Yet
obtaining this is not always straightforward.
For example, in recent months we at Sim-
Corp have spoken with several prospective
customers unable to obtain comprehensive
analysis of exposures for days or even weeks
after a counterparty has signalled trouble. It
is hard to manage a problem when its scope
cannot be determined.
So how is it that such apparently basic
information can be so hard to find? In the
14
DSMG 2009 1-21 b.indd 14
cases we have seen, one of the main prob-
lems has invariably been the existing ap-
plication systems architecture, which maps
discrete applications more or less to the
organisational structure. While that makes
some sense from a functional point of view,
it creates serious difficulties in respect of
data. This is because functionality gener-
ally supports distinct operational processes,
whereas data needs to be shared throughout
the enterprise. In organisations where each
business function has its own system, the
same logical data will be stored in many
different physical representations; the same
security or trade, say, will be represented in
different ways in different systems.
“It is imperative to
have a proper
understanding of
counterparty
exposures.”
Such a departmentalised approach to ap-
plication systems architecture can result in
huge complexity. This in turn obstructs the
creation of a consolidated view, which would
necessitate understanding the different
data sets involved, then extracting, filtering,
manipulating, reconciling and formatting
data from each to arrive at the required
report. Attempting to obtain a comprehen-
sive understanding of exposure to a coun-
terparty across asset classes as diverse as,
say, equities, fixed income, cash, exchange-
traded and OTC derivatives, exemplifies well
how a fragmented architecture can hamper
an organisation’s ability to operate effec-
tively. Furthermore, because of all the steps
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 Investor Services Journal | DataSe rvicesMar ketGu ide2 010
“Obtaining even
complex analyses does
not require pulling
data from multiple,
disparate sources and
massaging it into a
consistent form”
involved, it would be impossible to obtain
a consolidated view accurate to the second,
even if all the processes required were identi-
fied and built in advance of the need arising.
One way to resolve this problem, at least
partially, could be to utilise a data ware-
house. Typically this would be fed from all
relevant systems on a pre-defined frequency,
depending upon the specific data involved,
and then interrogated as necessary. However,
the success of such a solution for consoli-
dated reporting of counterparty exposures
depends upon several things. One of these
is that the designers of the data warehouse
must have accurately predicted what data
will be required in a given, possibly urgent
situation in the future - ie, that of all the data
in the enterprise, the data required at any
moment is included among the data actually
stored. Another is that if it is updated on a
periodic basis, even if that is daily or intra-
day, a data warehouse cannot offer up-to-
the-second accuracy. Time delays are in-built
into the approach, as a series of sequential
processing steps must be involved, by which
time positions may have moved.
A better solution, indeed the only kind
that can provide an accurate up-to-the-
second view, is to use a seamless process-
ing system across the organisation. Such a
system offers comprehensive functionality
to support each aspect of the operation,
so to each department it appears that they
have their own system. However, the whole
operates around a single core database. This
DSMG 2009 1-21 b.indd 15
Monitoring Exposure
means that there is only one instance of any
data in the system, so one definition for
each security, one record of any trade,
position, account and so on. All users use
exactly the same physical data, rather than
their own department’s private version.
And since users use the same system, all
asset classes are handled in the same
database and all reporting is driven from
it too.
The result is that obtaining even complex
analyses does not require pulling data from
multiple, disparate sources and massaging
it into a consistent form. Rather, it involves
using standard reporting tools to query
the database, which, if it is a modern,
widely used platform, will have its structures
clearly and openly defined for easy
extraction.
To the uninitiated, particularly anyone
working in an investment management
business where a highly fragmented systems
architecture exists, a seamless processing
approach may sound almost too good to
be true. However, at the same time as those
investment organisations mentioned above
were taking days and weeks to identify
consolidated counterparty exposure, users
of seamless processing systems were
deriving the same information in seconds,
where such reports were predefined, and
in no more than a few hours, where new
reports had to be created from scratch.
Furthermore, as all users access the exact
same physical set of data, there are no time
delays in data being refreshed and all data
in the system, and thus all reports, are as
up to date as anyone, anywhere across the
enterprise knows. n
John Mayr is responsible for marketing and
partner development at SimCorp. The compa-
ny’s investment management system, SimCorp
Dimension, is a powerful and comprehen-
sive system with a combination of seamless
processing, broad instrument coverage and a
wide range of tools to support all aspects of the
15
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 Investor Services Journal | Data Services Market Guide 2010
Outsourcing
The outsourcing phenomenon
If you can’t beat ‘em, employ
‘em. More financial institutions
are outsourcing their back office
processes to a third part specialist.
Pramod Gupta, head of financial
services product engineering at
HCL Technologies, explains the
issues surrounding Master Data
Management.
I n the investment management industry,
Master Data Management (MDM) is
expected to be sophisticated enough to
handle the market’s ‘difficult to understand’
products and myriad stakeholder
relationships; while at the same time be
simple enough for decision makers to see
16
DSMG 2009 1-21 b.indd 16
through subsets of entities with absolute
clarity. These attributes can be difficult
to reconcile within a working solution
implemented or managed in-house and
analyst house Gartner has warned about
the significant incidences of failed MDM
deployments. As a result, outsourcing some
or all of the deployment and management of
MDM to specialists is becoming an option
that many institutions are turning to.
MDM is typically applied to entities,
such as customer data integration or
product information management,
which are of critical importance to the
operation and success of an organisation.
A MDM solution will have some means for
cleansing and aggregating incoming data
(ETL tools), and data models for storing
the cleansed, golden copy, along with
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 Investor Services Journal | DataSe rvicesMar ketGu ide2 010
support mechanisms such as distribution,
auditing and certification. In even the
simplest financial institution, these tasks
will be complex and likely to be beyond the
available resources or operationally desired
competency of an in-house IT function.
In capital markets, MDM applies to
entities such as counterparties, instruments,
accounts, trades and positions, and
venues. Some of these entities are more
complex because of lack of standardisation
across the industry and the wide variety
of compliance considerations that
need to be taken into account - for
example, the MiFID regulation, which
requires client details to be immediately
accessible. The massive amount of data
in a typical financial institution, together
with these complex data-governance
requirements, reinforces the position that
successful MDM is a specialist field.
MDM is increasing in importance
in capital markets because so many
business applications (for example, risk
management, FOMS and Corporate
Actions etc) are dependent on consistent
and reliable data. A typical financial
institution has a number of incoming
sources (for example, Bloomberg, Reuters
or Hoovers) and a number of outward
destinations (downstream applications,
compliance or analytics). Good MDM
solutions ensure that these applications and
data sources work to make an institution
more knowledgeable, rather than more
confused, but aren’t easy to implement.
Because of the non-standard nature of
MDM, a certain amount of consultancy
is always required. However, given the
ongoing complexity we’ve referred to,
options have been developed by vendors
that go beyond helping with the initial
deployment and maintenance. Various levels
of outsourcing, with infrastructure, IP and
master data being held variously either by
the vendor, client or combination of both,
are now regularly offered and, more’s to
DSMG 2009 1-21 b.indd 17
Outsourcing
“Good MDM solutions
work to make sure that
applications and data
sources work to make an
institution more
knowledgeable”
the point, taken up by institutions.
At one end of the outsourced MDM
model, a custom built (or customised ‘off
the shelf ’ solution) is installed in client
premises, with ongoing management
provided by consultants locally or remotely.
With this option, not only is the master
data still residing within the client’s
perimeter but they could also retain the
associated solution IP. At the other end of
the spectrum, a packaged MDM product
is installed at the vendor’s site to provide
ASP access to clients. There are many
combination and further options between
these two extremes. What they have in
common is offering financial institutions
the flexibility to secure the benefits of
MDM in the way that suits them best.
MDM solutions allow institutions
to easily manage and understand what
would in former days be a dizzying array
of information. Gartner has suggested
that by 2012, MDM will lead to a 60%
reduction in all costs associated with the
elimination of redundant master data.
However the analyst firm has warned
that, due to the lack of a sufficiently
business-oriented approach, appropriate
governance and accompanying metrics
structure, 30% of MDM programs will
fail. This message is clear; institutions
need successful MDM deployments.
Outsourcing to specialist vendors is a very
good way to make sure that happens. n
Pramod Gupta, head of financial services
product engineering at HCL Technologies
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 Investor Services Journal | Data Services Market Guide 2010
Merger Update
Merger Update: A Restructuring Case Study
Fiserv’s acquisition of CheckFree is
a key example of how post-trade
services may need to be realigned
to better suit the client’s needs
18
DSMG 2009 1-21 b.indd 18
A fter concluding the acquisition of
CheckFree in December 2007, Fiserv
developed a new market approach and
brand identity. Where previously the
company had 77 units over the organisation,
and acted more like a holding company,
there is now a focus on Fiserv and,
underneath, two major divisions. “We
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 Investor Services Journal | DataSe rvicesMar ketGu ide2 010
identified the core competencies across
Fiserv and came up with five: processing
services, payments, risk and compliance,
customer and general management and
business intelligence and optimisation,” says
Harries. “Identifying those key competences
allowed us to establish and consolidate
around a vision of Fiserv rather than each
business unit having its own vision.”
This realignment has included some neat
footwork in rearranging certain areas of
business. An example of this was a business
unit called Interactive Technologies, which
was part of the Fiserv company. This
was moved into the CheckFree investor
services division, as, according to Harries,
it had closer synergies with the needs of
existing clients. “We found there were lots
of mutual clients in terms of the asset
managers and custodians which we had
relationships with and it made sense to
better service them by bringing them
under the investor services umbrella.”
Multiple challenges now present
themselves to solution providers such as
Fiserv, spurred by the wider tremors in
the financial market. Greater transparency
is demanded of banks along with a more
thorough understanding of its middle
and back office. At the same time, staff
levels are declining. Solution providers
can help on both scores. “Firms need to
have the operational capability in place
because they’re being challenged more
often to prove they have the processes
and risk mitigation strategies in place.”
“The other thing high on the agenda
is being able to do the same or more
work for less people. To do that you
need something which improves your
operational efficiency and many of the
solutions in investor services are targeted
at reducing operational risk and increasing
operational efficiency. So the current market
climate allows us to position our solutions
better and get those particular aspects
people need for those requirements.”
DSMG 2009 1-21 b.indd 19
Merger Update
The scrutiny of operations will extend
to an analysis of the widening book
of asset classes being traded, Harries
believes, particularly those exchanged
over the counter. “What we’ve seen is to
diversify the port out of the mainstream
portfolio out of the mainstream equities
and bonds, foreign exchange and to
incorporate a wider asset class coverage.”
In this space, Fiserv offers a post-trade
lifecycle system, from confirmation to
settlement. Derivatives, as contracts with
often multiple variables, require a greater
degree of ‘event management’ during
this time period than equities, including
the teminination of novations and the
amendments of existing positions. It
is, he says, “a hot topic in the industry
to ensure people have the capabilities
to manage the increasing volumes”.
Often, trading firms will work from a
cetralised platform – such as Omgeo’s equity
matching, or DTCC’s Derivserv – and Fiserv
works with them. “We give investment
managers the capability to be able to
connect to these platforms, to interoperate
with diff platforms and manage their book
of business across diff asset classes which
naturally goes over many platforms.”
This post trade system has been
increasingly used by asset servicing firms to
help them offer outsourcing services. Harries
says Fiserv supplies to “seven out of the
top ten” asset servicing providers. Harries
explains that the end client, on the other
side of the asset servicer, either people don’t
want to have those function in-house, seeing
themselves as money managers, or there’s a
skills gap. Some firms may also outsource by
asset class, he adds. “So while they might be
happy to run their equity operations, they
may not want to run their derivative. So
they may not outsource everything; it may
be a particular asset class or capability.” n
Geoff Harries is vice president
of product strategy at Fiserv.
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 Investor Services Journal | Data Services Market Guide 2010
New Architecture
New architecture in light of regulation
Regulatory compliance has had, and will continue to have an effect on the
IT spending by financial institutions
T he Financial Services Authority
(FSA) recently demanded that
banks spend nearly GBP1 billion on IT
upgrades as part of an extensive overhaul
of the Financial Services Compensation
Scheme (FSCS) – which insures
individual savings accounts worth up to
GBP50,000 in the event of a collapse.
The proposed investment is designed
to ensure that banks will be equipped
to provide a full list of each customer’s
deposits within two days of a potential
collapse, thus ensuring savers can be
reimbursed by the FSCS within one
week. The central idea is the creation of a
‘single view’ of each customer where all
information – mortgages, savings, credit
cards – fully accessible and in one place.
While this is certainly a admirable goal for
the future, in today’s world, the information
is likely to be spread across multiple
20
DSMG 2009 1-21 b.indd 20
divisions which may even use systems
that are unable to speak to one another.
As a result, many institutions are not
in a position to currently facilitate this
single view. However, there are steps that
can be taken today that will position
companies to prepare for the ‘single view’
that will be required in the future.
In the context of existing compliance
laws such as Sarbanes-Oxley (SOX) and the
Data Protection Act, the FSA’s proposals
underscore the need to invest in data
systems that accurately record and structure
data so it can be accessed in real-time for
compliance reports. A research report
recently commissioned by DataFlux, a
leader in data quality and data integration
technology, and conducted by BDRC, an
independent research company specializing
in the UK financial services sector, points
to a developing trend of new regulation.
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 Investor Services Journal | DataSe rvicesMar ketGu ide2 010
The report revealed that 91% of financial
institutions surveyed expect further
regulation in the near future with particular
focus on security, accuracy and quality of
data: “It is going to be ID fraud mainly and
continued maintenance in order to keep data
as accurate as possible. Also making sure
customers’ information is as up-to-date and
accurate as possible in order for customers to
have confidence in what we hold is correct.”
– Verbatim response, Data Quality Manager
commenting on data challenges in 2009.
In such a climate it is vital that
financial institutions equip themselves
appropriately to handle their data. The
same survey pointed out that although
73% of respondents cite compliance
as the primary motive for investment
in data management, meaning that
its importance is central to the legal
success of the bank, the responsibility for
maintaining data quality is often scattered
across departments –16% of institutions
surveyed didn’t assign responsibility at
all. Where there is no direct responsibility
held for managing data quality, it is
difficult to be hand on heart compliant.
Financial institutions are facing a tough
climate and are eager to rein in spending and
maintain existing capital – but data really
should be an area that attracts investment.
Clean, accurate data is an invaluable
strategic asset and should be treated as
such rather than being allowed to degrade
and develop into a liability. In order to
prevent data becoming a liability banks
must ensure it is trustworthy. This requires
a comprehensive data governance scheme.
The aforementioned report found that
whilst 45% of companies had either already
implemented or were in the process of
implementing a data governance project,
most encouragingly, a further 19% were
considering it. For data governance to
be effective, it requires a combination
of people, processes and technology.
The benefits of accurate and accessible
DSMG 2009 1-21 b.indd 21
New Architecture
data are far-reaching. It is a key enterprise
asset – not only in terms of compliance
but also in providing crucial information
to facilitate targeted sales. Without the
single view that the FSA is pushing for,
banks often miss opportunities to provide
personally tailored help and advice, or
worse, approach the wrong customer with
the wrong advice and further damage
their customer relationships. Data also
enables revenue generation. The UK
Financial Services Sector, for example,
sells on average just 2.5 financial products
to each customer. This is below European
and US levels and demonstrates the need
for improved cross-selling of products.
If financial institutions are prepared
to spend time and money on bringing
IT systems in line with FSA demands
they will gain a significant competitive
edge over those whose approach remains
stilted. They will breed confidence within
their current customer base through the
knowledge that the FSCS will be able to
reimburse them within a week. This aim
resonates with the challenges our survey
respondents are preparing for over the
next 12 months: “I would say security of
data is key. If you can hold data securely
you’ll be trusted by clients otherwise
you’ll lose clients on the basis of trust”. –
Verbatim response, Data Quality Manager
commenting on data challenges in 2009.
Good quality data can be used to identify
business risk or for business intelligence
analysis. All these benefits occur as valuable
side effects of compliance with the FSA
proposals. In addition, and perhaps most
importantly, with animosity towards
banks at a high and confidence at a low,
data that is accurate and accessible may
enable banks to begin to rebuild trust in
increasingly fragile customer relationships.
It is likely to prove a sound investment. n
Colin Rickard, Managing Director,
North & West Europe, DataFlux
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 Investor Services Journal | Data Services Market Guide 2010
Panel Debate

The 2009 Panel Debate

MARTIJN GROOT: Director of

market strategyr, Asset Control

COLIN RICKARD: managing director, west and North Europe,

DataFlux. Colin has15 years experience in the construction
and implementation of Data Warehouses, CRM systems and
Managed Services in both the UK and US markets.

GERT RAEVES: head of marketing

and business solutions, GoldenSource

BOB CUMBERBATCH: European

business lines director, Interactive Data

RICHARD STUMM: vice president, Business

Development, Broadridge Financial Solutons

22

DSMG 2009 22-48 b.indd 22 16/04/2009 13:18

 Investor Services Journal | DataSe rvicesMar ketGu ide2 010
1.Research shows a prospective decline
this year in the amount hedge funds, as
one investment vehicle, will be spending
on information technology. How can you
maintain and grow business volumes
on your side when cutting cost – even
in middle and back office departments
that needs the best data – is to occur?
GROOT: Hedge funds’ assets under
management (AUM) are taking a hit
due to redemptions and declining asset
values. Since their revenue model is based
on AUM, funding for any project will be
harder to find. On the other hand, hedge
fund strategies that do not depend on
leverage will survive and some hedge funds
will prosper from the current turmoil.
Those hedge funds that are in a position
to exploit the opportunities that the
current low valuations bring will do well.
RICKARD: Although overall IT spend is
predicted to fall, investment in data quality is
very strong at the moment. This is primarily
due to two trends that have recently
emerged: firstly, companies have shown an
increased interest in data risk mitigation,
as they realise that data risk is a business
risk. For example, the ability to spot risky
loans depends on accurate, real-time data.
Secondly, we’ve seen banks realise that data
investment has a very short payback period
and a sound financial case – it’s cheaper to
standardise databases through consolidation
than to keep paying for the maintenance
of disparate, outdated legacy systems.
RAEVES: There are strong competing
and mutually exclusive forces at work in
the market. On one hand, the ongoing fight
for survival means that many individual
firms and - in the case of the hedge fund
industry - entire market segments have little
room left for any initiative that does not
have an immediate impact on the bottom
line. On the other hand, the ongoing market
DSMG 2009 22-48 b.indd 23
Panel Debate
turmoil shows that a clear and consistent
understanding of critical investment data
is vital and no longer just a luxury.
The good news is that data management
can be applied to the targeted areas that
firms want and, in many cases, need to
improve immediately without stepping into
the “big vision” EDM projects that may
be too ambitious this year. This includes
counterparty credit risk monitoring, pricing
and valuation processes for common
equities as well as for OTC derivatives, and
front-end corporate actions automation. All
of these are difficult to accomplish without a
sound data management structure in place.
It is also the case that data management
practices are in need of improvement
worldwide. While the New York/London
axis has taken on much of the post-
turmoil impact, we have been doing very
brisk business in Central Europe, Asia,
and Africa in 2008. EDM has gone global
– and as a supplier to that market we
follow that interest wherever it occurs.
CUMBERBATCH: While there will be
a desire within financial services firms
to cut costs in today’s difficult business
environment, the reality is that the fall out
from the credit crunch demands firms invest
selectively in more data services rather than
less. While the overall budget may be under
siege, firms are more likely to have to re-
allocate existing budget to those data services
that meet new business requirements
rather than deploy a static spend.
There are a number of areas that will
require financial services firms to reassess
how they will deploy their information
spend over the coming year. International
regulators have identified shortcomings in
liquidity risk management practices, not
least in the application of stress testing
under extreme liquidity events. Liquidity
risk management is now high on the
regulators’ agenda and is fast becoming
23
16/04/2009 13:18
 Investor Services Journal | Data Services Market Guide 2010
Panel Debate
a key issue for investment firms. Firms
will have to be able to collate, on an
‘on-demand’ basis, a wide range of data
relevant to all assets, liabilities, contingent
assets/liabilities, derivatives positions
and other off-balance sheet activities.
Counterparty risk monitoring has also
become a significant part of overall business
operations. One of the major drivers
for heightened attention to managing
counterparty risk is that financial services
firms – be they hedge funds, asset managers
or sell side institutions – need to avoid
the negative impact on a firm’s operations
should a key counterparty default on
their obligations. At the same time the
volatility and the lack of liquidity in the
markets has contributed to the demand
for independent evaluations of a wide
range of securities as financial institutions
are seeking information to help ensure
that they can effectively value their wide-
ranging, often complex, portfolios.
So while budgets will be under pressure,
there is a compelling need for data sets
addressing key business issues such as
business entity data for counterparty risk
management, independent evaluations
– particularly for ‘hard-to-value’ assets
– combined with analytics to help
clients manage the required content
required for investment applications,
as well as meet regulatory requirements
to facilitate risk management.
STUMM: We believe that a managed
service is the most cost-effective solution
for any firm. As firms look to spend wisely,
we believe that firms can save money
by moving commoditised functions to
a qualified provider that has the proven
ability to support their growth objectives.
Firms can, therefore, spend their precious
IT dollars on those things that will
differentiate them in the marketplace.
2. One subject of discussion at last year’s
24
DSMG 2009 22-48 b.indd 24
FIMA conference was the growth in
vendors with a mutual client collaborating,
with Omgeo, SWIFT and others cited as
examples. Is this an area that you believe
will grow as security and risk management
become the top two issues for these banks?
GROOT: This will certainly grow as
there are many vendors looking to expand
business opportunity in a shallower
pool. In some cases, more structural
partnerships that offer complementary
services will emerge and some of these
may lead to industry consolidation.
Ultimately, it is the customers who
will decide which partnerships bring
lasting value and which do not.
RICKARD: Certainly – DataFlux is
partnering with data content providers
where relevant, and we work regularly with
systems integrators on large projects.
RAEVES: People want to share risk more
than ever, so all forms of shared governance
and mutualisation have obvious attractions
to an industry looking for mitigation. Yes,
there will be a growing desire to explore the
potential for utility infrastructures for data
management, but this will likely remain
an intellectual/political debate for the
time being. Collaborative efforts are often
preceded by years of development; SWIFT
and OMGEO, for example, have been
building their communities for decades.
CUMBERBATCH: At Interactive Data,
we have a track record of working with
other vendors and service providers to
help them to address problems and to
develop opportunities. Interactive Data has
partnered with numerous firms to bring to
market innovative new services including
our award-winning ISO 15022 corporate
actions and class actions data. Working
with software vendors, we aim to ensure
that our data not only flows seamlessly
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 Investor Services Journal | DataSe rvicesMar ketGu ide2 010
into these third party applications, but also
that the data is correctly represented in
these applications, thus helping to reduce
the risks and timescales for firms wishing
to implement an automated solution
for corporate actions processing and
aiming to reduce their operational risk.
In the business entity arena, Interactive
Data formed alliances with Avox and
CounterpartyLink to provide business
entity data services designed to help firms
manage counterparty risk and to comply
with new financial market regulations such
as UCITS III, Basel II/Capital Requirements
Directive (CRD) and MiFID. Our credit
default swap (CDS) valuation service was
developed through our strategic alliance
with Markit Group Limited and our recent
exclusive agreement with Prism Valuation
enables us to offer clients valuations of
highly complex OTC derivatives and
structured products as part of our wide-
ranging pricing and evaluation services.
STUMM: We believe that strategic
partnerships can help to solve industry needs
in a timely fashion. The Broadridge Global
Reference Data Solution (GRDS) is, in fact,
a joining of forces to provide a solution
that includes Broadridge, GoldenSource
and IBM. It is important to choose the
right partners and, in the case of our GRDS
offering, firms that are best-of-breed in
financial services outsourcing, enterprise
data management and systems integration.
3. Is the choice between outsourcing
much of the data management to external
providers, and developing a system in-
house, a matter of the size of institution?
What other factor might be involved?
GROOT: Firms outsource for different
reasons and it is not purely a matter of
size. Small firms often outsource because
they do not want to carry the full cost
of an infrastructure. In the case of large
DSMG 2009 22-48 b.indd 25
Panel Debate
firms, there are strategic considerations
as to whether they want to do all of the
data management in-house. In this case
it will depend on whether they view
data management as a value-add to their
service offerings, which also depends on
their product, volume and geography
mix. For some financial institutions in
the asset servicing and custody world, the
ability to construct added data services
is a core part of their businesses.
RICKARD: The obvious factor in the
outsourced vs. in-house data management
debate is one of cost, but the factor of
control must also be considered. Obviously,
it costs more to outsource data, and
companies will also have less control over
outsourced data than if they managed it
internally. We also typically see that the
people who have the clearest ideas around
how to organise and control data are the
people within the companies who work
most closely with the databases. In these
cases all the expertise is in-house so it
makes sense to use that expertise to your
business’s advantage. We use the terms
‘undisciplined’, ‘reactive’, ‘proactive’ and
‘governed’ to describe how mature a
company’s data strategy is. For a less mature,
or ‘reactive’ organisation, outsourcing may
be the best short-term solution, at least
until their business formulates a more
sophisticated data governance programme.
RAEVES: In theory, everyone likes the
idea of outsourcing data management. Most
firms rely upon similar or same sets of data
from the usual providers and much of this
data is not proprietary nor offers immediate
competitive benefits. With such a sizeable
amount of common data, it is only natural
that people ask “why are we all doing the
same thing in our own shops, when we
could just connect to a shared service?”
The big problem is the lack of precedent.
There are hardly any examples of successful
25
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 Investor Services Journal | Data Services Market Guide 2010
Panel Debate
“It is only natural
to ask: ‘why are we doing
the same things in our
shops when we could just
connect to a shared
service?”
Gert Raeves, GoldenSource
outsourcing of reference data, often
because providers did not always have the
right pedigree or architecture in place.
GoldenSource chose to partner with
Broadridge to offer a managed data service
precisely because they had the proven track
record and infrastructure necessary to
deliver our platform to a global client base.
2009 will be an interesting year for
outsourcing providers, as more firms
than ever before are being ordered
by boards and investors to shed non-
core activities. The question to me
remains if managing data can ever be
considered “non-core” in our industry?
CUMBERBATCH: A number of
factors can determine whether a
financial services firm will look to
either buy a data management system,
build their own internally or look
to outsource to a third party.
In considering outsourcing, financial
institutions need to look at their own
specific circumstances when weighing up the
advantages of working with an external data
management provider. Outsourcing entails
replacing internal staff and processes with
more effective external staff and processes.
However, before undertaking what can
be a complex business relationship with
a third party, firms need to understand
that while the day-to-day management of
data is with a third party, responsibility
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DSMG 2009 22-48 b.indd 26
for quality still lies with the firm.
While it is alluring for the day-to-day
problems of data management to be
outsourced, organisations need to determine
who defines the client and product
descriptions; who knows of the correct
relationship between client, counterparty
and organisation; who resolves the conflicts
among these data sources, and more
importantly, who owns the data? Settling
data governance policies and practices is an
enormous, corporate-wide undertaking.
Without business involvement in
data management, the project can
often be doomed from the start.
Unlike other IT issues related to data
management, data and its management
are not merely infrastructure. The business
impact of data is direct and its monetary
benefits are measurable. Given that the
language of business is not the language
of data management, the challenge lies
in translating how data management
should create clear business benefits.
STUMM: The outsourcing versus in-
house question is not related to the size
of the institution. It is more related to
solving a business need that is driving a
line of business to adopt a high-quality and
cost-effective solution. Another factor is
firms being cautious about outsourcing the
data related to proprietary information.
We feel that with the right provider
such as Broadridge, which is ISO27001
certified, a firm can actually achieve the
goal of enterprise data governance by
utilising a single outsourced provider.
4. Information is only one component
of knowledge, hence the argument for
sufficient data ‘quality’. But where can
line be drawn between receiving multiple
data feeds to-for example - assess a
counterparty and its products, and
simply having too much information?
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 Investor Services Journal | DataSe rvicesMar ketGu ide2 010
GROOT: Having multiple feeds brings
benefits in terms of independence, quality
improvement by being able to cross-
compare data products, and complementary
strengths in geographies, products and
business continuity. When adding additional
feeds, firms have to ascertain whether the
information is going to be used on a regular
basis – such as a basis for golden copy, as
an additional check to validate data, or as
a unique, additional information source.
Institutions that centralise incoming data
feeds tend to do more with them in terms
of cross-comparison, quality checking
and feed integration. In addition, they
are in a better position to insulate their
applications from often frequent vendor
changes to provide greater continuity. In
turn, centralisation also highlights unused
data assets, which can help organisations
to assess usage and gain efficiencies.
RICKARD: All data is useless, no
matter how great or small the quantity,
if it is not organised properly or cannot
be trusted. Businesses are nearly always
data-rich in terms of quantity, but when
it comes to quality, the problems around
accuracy can leave a company without
a true picture of what is going on.
Organisations need the correct data quality
processes to ensure reports provided from
business intelligence (BI) systems can be
relied upon to provide the appropriate
information to senior decision-makers.
RAEVES: Only the data consumer can be
the judge of that. In this context, the level
of control and configuration that a data
management solution offers becomes a
crucial differentiator. If necessary and right
for the business, the solution has to be able
to support an avalanche of data. In addition,
the filtering and selection of data needs to be
simple to allow a business user to fine tune
the flow of data to suit his/her information
requirement. No business will allow a “one
DSMG 2009 22-48 b.indd 27
Panel Debate
“While day-to-day
management of data is
with a third-party,
responsibility for
quality still lies with
the firm”
Bob Cumberbatch, Interactive Data
size fits all” data management model.
Achieving this is simpler than it
sounds, as smart routing, filtering,
request-based processing have all
become standard in a post-middleware
service-oriented architecture.
CUMBERBATCH: Data quality is not
a single metric and not all data is created
equal. When looking at a low latency feed
the requirement is all about speed, while
for front office trading purposes details
about a bond may only require a minimum
subset of the available attributes, such as
name and coupon rate, but will need much
greater details for settlement in the back
office. There are a number of dimensions
such as accuracy, timeliness, completeness
and reliability, which need to be considered
when talking about data quality. The first
thing to understand is what data – the
building block for information – is needed
for what purpose and to qualify a trusted
data supplier for that data. Where no
single provider can supply all the required
data then a combination can be created
from multiple suppliers. Indeed, financial
services firms often have to have at least two
independent sources of data to help ensure
accurate and reasonable portfolio values.
In today’s risk and regulatory
environment, firms need to be able to
seamlessly compare any differences in data
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 Investor Services Journal | Data Services Market Guide 2010
Panel Debate
“The ability to spot
risky loans relies on
accurate, real-time
data”
Colin Rickard, DataFlux
between vendors. Therefore rather than ‘too
much’ information, a clear understanding
of what data is required for what purpose
can enable users to purchase the data
they need rather than over subscribe.
STUMM: We believe the key is having at
least two points of reference for comparison
purposes. By simply having a point of
comparison, you can begin to evaluate
quality in a proactive manner. Otherwise,
the lack of quality is found after the
damage has been done. The other point
to be considered is automation. Having
the ability to take in multiple sources of
information and to compare and contrast
them in an automated fashion, will allow
you to make intelligent decisions as to who
the appropriate sources are, and will enable
you to get the highest quality data. Without
automation, this critical comparative process
can seem like “too much information.”
5.How far is the data management
world from metrics that will thoroughly
measure the effectiveness and quality
of enterprise data management?
GROOT: There have been some efforts
around constructing a “data quality index”
to provide a snapshot of overall quality. The
trouble is, one would need to know that
something is wrong. In addition, different
stakeholders have differing points of view
on quality aspects such as speed, accuracy,
completeness, transparency and auditability,
which complicate matters. Requirements
on data quality differ depending on where
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DSMG 2009 22-48 b.indd 28
the data is consumed in the trade lifecycle
(pre-trade and research, execution, clearing
& settlement, risk management, asset
servicing, financial reporting, etc.). The first
step towards quality and a precondition to
measuring any quality level is establishing a
common nomenclature to ensure everybody
is on the same page and can compare apples
to apples. Metrics drawn from, for example,
the world of supply chain management
that highlights quality issues and potential
operational risks, can follow from that.
RICKARD: The industry is already
there. In fact, the technology exists today
to monitor and report on the accuracy
of data over time. Financial services
organisations should be asking themselves
if they are treating data like other important
corporate assets and reporting on it at the
board level. There are two types of metrics
that can be used to measure this – direct
return on investment (ROI) and the
lesser-used “is my data quality improving
over time?” question. The importance
of ROI has been demonstrated when an
organisation knows how much it’s saved
on procurement through having a single
view of its supplier data or how much
has been saved in labour costs due to the
automation of the data quality function.
However, organisations also need to be
asking “is my data quality improving over
time?”. It’s through ongoing data monitoring
that organisations can see whether a data
quality implementation is aiding their
business; for example, can they see that
their customer address database contains
30% less inaccuracies than a month ago?
It’s important to remember that there
is no ‘once and done’ formula for a data
quality programme – the system needs to
be constantly measured to ensure bad data
doesn’t sneak back in and to ensure your
business rules are operating efficiently.
Business rules can always be modified
to fit changing priorities – they can be
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 Investor Services Journal | DataSe rvicesMar ketGu ide2 010
aligned against regulatory requirements,
for example, but you’ll never know how
to fit your data to your requirements
unless you look at the metrics.
RAEVES: The industry as a whole
is pretty far away from a common or
agreed set of metrics, as there is no such
thing as a generic business case for data
management. Firms start on these projects
for very different reasons and it is often
a case of comparing apples and pears
when people share their experiences on
funding and ROI for data projects.
Individual firms, however, have
become much more adept at creating
data management business cases
by understanding the many impact
sites and stakeholders that need to
be included from an ROI aspect.
CUMBERBATCH: While some progress
has been made in developing metrics for
data management, there tends to be a focus
on technology rather than the business
value of the data. Organisations can often
suffer from bad data for reasons that have
nothing to do with technology. Among the
causes of poor-quality data are inaccurate
reporting, internal discrepancies over
which data is appropriate and incorrect
definitions rendering the data unusable.
Improving the quality of their data requires
them to address any internal discrepancies
and broken processes. Staff must agree
on exactly what constitutes a ’customer’
or a ‘counterparty’ and how to resolve
any discrepancies across business units.
Departments and divisions need to agree
on hierarchies of customers and products
and how to resolve duplicate records across
sources. Rather than a technology-focused
effort, metrics need to be developed that
address the business value of data.
6. How will these metrics help the ‘case’
for a more detailed consideration and
DSMG 2009 22-48 b.indd 29
Panel Debate
higher budgets towards data management
in tomorrow’s financial institutions?
GROOT: Budgets can either be set at a
departmental level for “local” projects or can
be raised through a “data tax” across profit
centers, such as an overhead charged as a
fixed percentage or based on actual usage.
Metrics on data quality will help justify
and allocate budgets to specific areas, while
metrics on usage and value-add of specific
data sources will help allocate cost. The
current turmoil in the financial services
industry will speed up consolidation within
asset management and banking, which in
some areas is still quite fragmented. With
mergers and acquisitions comes integration
and the need for a scalable information
infrastructure, serving as the only basis on
which synergies and cost savings can be
made. In this case, metrics can also help.
RICKARD: Central to setting metrics and
building a case for increased investment in
data management is starting the process
with a thorough audit of an organisation’s
data at the outset. It is impossible to show
improvement and benchmark progress
without this step being done properly.
Using this information, organisations can
prove how investments in data quality are
improving key performance indicators
(KPIs), helping to demonstrate the business
case for data governance. ROI metrics
are particularly useful for those in a bank
that are responsible for data governance
projects. Demonstrating a quick ROI for a
smaller tactical project can often help data
professionals to gain funding to roll out
wider schemes across the whole group.
Banks should plan a two-pronged
approach to their IT finances, looking
firstly at their compliance needs and taking
into account an emerging trend for more
regulation in the financial sector. The
FSA, for example, has recently announced
proposals to ensure banks can provide up-
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16/04/2009 13:18
 Investor Services Journal | Data Services Market Guide 2010
Panel Debate

“With mergers and management projects because they can

more easily reach across business lines and
acquisitions comes identify shared data as a corporate asset.

integration and the CUMBERBATCH: The key consideration

need for a scaleable is for metrics that show data to be accurate,
consistent, timely and comprehensive, which
information ensures trust and confidence that the data is
fit for purpose. Demonstrating that key core
infrastructure” data is fit for purpose from trusted suppliers
is the essential component in building
Martijn Groot, Asset Control the business case for a data management
budget. For the business, improvements
to-date information both on their customers in data quality are all about improving
and to their customers in respect of the business performance, enhancing customer
FSCS (Financial Services Compensation experience, reducing operational costs and
Scheme). The thinking behind this move is helping to ensure regulatory compliance.
that in the event of a bank failing, the high
accuracy of its data would enable rapid “Firms can save
payment of compensation to savers, which
in turn will drive confidence in the banks. money by moving
Existing issues such as international watch
lists must also be considered. Compliant
commoditised
organisations are those with trustworthy, functions to a
accurate data. The second ‘prong’ is to
examine how you can cut back-office costs qualified provider”
– a good example is call resolution in the
customer call centre. A customer query
answered in one call not only makes the Richard Stumm, Broadridge
customer happy, it also saves the operator’s
time and saves the organisation money. STUMM: It may not be metrics
This kind of lateral thinking is one way that drives higher budgets in the data
that banks can instigate successful and management space. It is more likely to
shrewd data governance programmes. be a necessity in meeting a firm’s risk
management and reporting requirements.n
RAEVES: It is impossible to generalise
about business case and ROI. Building a
successful business case means asking a lot
of questions; unfortunately, the answers will
always be different for each institution.
I would suggest the challenge is getting
the right people behind the business case
rather than proving it through metrics. If
a potential project is driven from a group
of data management specialists or IT staff,
it can be a struggle. We have seen more
success when CROs and CFOs support data
30

DSMG 2009 22-48 b.indd 30 16/04/2009 13:18 GSL Su

 GSL Summit
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GSL Sum
DSMG Lend4Liq_148_210.indd
2009 22-48 b.indd 31 1 16/04/2009 13:18
16/04/2009 10:38
 Investor Services Journal | Data Services Market Guide 2010
Cost
Data - bettering the bottom line
Andreas Glatter (pictured right) at Ecofin explains the cost argument for
centralising data and improving accuracy
1 Price Impact of Correct
and Centralised Data
1.1Automation Projects and Data Projects
Prices of services in the financial industry
depend on production cost and volume. Lower
prices can only be reached by higher volumes
and less cost. Increasing volume requires
a higher degree of automation. Therefore
investments in automation are re-quired in
most cases in order to lower prices of services.
It is obvious that automation critically
depends on the availability of accurate data in
32
DSMG 2009 22-48 b.indd 32
electronic format. This is particularly true for
reference data (data describing the nature of
financial instruments and the environment
they are traded in). Without correct data
automation projects will simply fail.
Investments on automation projects
usually don’t pay, if they have to finance an
asso-ciated data management project. If not
all automation projects are to fail due to
un-availability of data or due to the inability
to support an associated data management
project, the decision on data management
projects needs to be separated from the de-
cision on individual projects using the data.
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 Investor Services Journal | DataSe rvicesMar ketGu ide2 010
Cost

1.2 Data Centralisation

As a consequence data management
projects are only likely to be justified
if data is centralised and serves a large
number of other projects and applications.
Centralisation in data management
is desirable for other reasons too:
• Centralisation lowers the costs of
data acquisition and data
maintenance since infrastructure
and man power is required only once,
• Centralisation increases the bargaining
power in negotiations with suppliers
and tends to lower the price of data, “Centralisation lowers
• Centralisation lowers the
number of interfaces required, the cost of data
• Centralisation ensures consistency
of data across all appliances
acquisition and
Decisions on data management projects maintenance since
require a strategic view on where the
institution should go in terms of services infrastructure and man
provided, risks associated with the services, power is only required
flexibility of the offering etc. and what data
will be required to support all aspects of the once”
operation. Management needs to be aware
that the availability of the right data is cru- and operational flexibility and investments
cial to the future development of the firm. into the data management infrastructure.
Nobody can exactly tell the future value This is widely accepted in the area of
of data, but it should be obvious that future market data and for many projects in the
developments will require more data and past market data and little reference data
not less. Therefore, not the exact savings in was needed. Management now becomes
certain areas or other metrics are decisive, increasingly aware of that the same is true for
but the strategic perspective of the firm. reference data, since all more sophisticated
Management has to be aware that automation processes in the areas of securities
thorough data management processing, risk management or evalu-ated
• is crucial, prices increasingly need reference data.
• requires a complex infrastructure to
be built up and maintained over time 1.3 Outsourcing as Extension to
• and needs time to establish. the Centralisation Concept
The more flexibility is desired, the more If centralisation of data management
data is to be readily available. You only activities is the right answer for single
can decide to move into another business institu-tions the natural extension of the
area if you can make the necessary data centralization concept is outsourcing. Why
available in due time. This in turn requires an should all financial institutions make the
infrastructure capable to support such moves. same efforts to get the data right instead
Thus there is a correlation between strategic of pooling resources and get the same
33

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 Investor Services Journal | Data Services Market Guide 2010
Cost
output for a fraction of the price?
In a sense, data vendors have always been
acting as outsourcing partners to the finan-
cial community. In fact, several of today’s
data vendors (eg, Telekurs) have explicitly
been created as an outsourcing project.
Today their clients face the same prob-lems
as clients of data vendors with different
backgrounds. So, if data vendors do not bring
the solution, how could an intermediate
layer between data vendors and user in-
stitutions can bring about a better solution?
There are a number of problems specific
to data management outsourcing that
have to be overcome in order to make
outsourcing projects successful:
• First, it is very hard to ensure data quality organisation and why local spreadsheets
without using the data. You have to see what
doesn’t work using the data in order to find out
what is wrong with the data itself. Therefore
outsourcing projects in data management
should be accompanied by other outsourced
processes, e.g. corporate action processing,
evaluated prices projects or similar projects.
• Second, external data management
for multiple entities faces a dilemma:
−The external supplier tends to
provide the data a large number of
users are willing to pay for and neglect
data required only by a few users.
−The supplier has no incentive to go beyond
what is stipulated in the SLA just because
a user urgently needs to solve a particular
problem. On the other hand, for the user
it is critical to have the few data items right
now – regard-less of what the SLA says.
Both effects tend to degrade the services
of each user institution, because the user
services won’t get the right “finish” this way.
• Third, requirements for additional data between independent organizations. Even
are usually easier communicated inter-nally
than externally, because the decision chain
is much shorter and does neither involve an
external hierarchy nor a complex contractual
framework (even if inter-nal SLAs are in place).
Since data management is a very dynamic
issue, this is an important consideration.
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DSMG 2009 22-48 b.indd 34
For all these reasons it is difficult to make
outsourcing successful in the area of data
management. It is most likely that what data
vendors provide is what can be achieved by
outsourcing for a larger number of customers.
To provide an intermediate level of
service that will result in mutual benefits to
all parties involved is a challenging task.
The same reasons making it difficult to
outsource also make it difficult to centralize
data management internally. This partly
explains why firms organized in silos with
largely independent hierarchies have much
greater difficulties establishing a central data
management than others. It also explains
why never all data is centralized in an
and applications with proprietary data will
always coexist with centralized data. It is a
constant challenge to decide what data is to
be centralized and what is to be kept locally.
“Future
developments will
require more data
and not less”
1.4 Conclusion
• Cutting prices of services will require
higher automation and more data. More data
can be acquired best if data management
is centralized from a technological
standpoint and for cost reasons.
• Centralisation has inherent problems that
can more easily be overcome internally than
in single hierarchy organizations centralized
data will always coexist with local data. The
challenge is to find the right balance.
• Outsourcing projects should
carefully identify the data suitable for
outsourcing and continue to manage
data internally which is not. n
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 Investor Services Journal | DataSe rvicesMar ketGu ide2 010
Time for
SaaS?
T ime changes everything. What was once
state of the art becomes a cumbersome
nuisance at some point. The explosion of
activity that occurred in the 1990s, when
hundreds of small software companies
built applications to sell to asset managers,
allowed a big increase in efficiency. Processes
that had taken weeks were reduced to
hours or minutes. New processes that were
impossible dreams became a reality. This
was all possible because of Windows and
Visual Basic and the process was not unique
to asset managers but affected every business
sector. By comparison, the dot.com boom
did not reach the business community but
was aimed at the retail market and when it
busted prematurely, development slowed.
Today the IT landscape of the asset
management industry is one where any
company of any size has 10 to 20 important
systems upon which they depend for a
variety of essential services. The majority of
these systems are all provided as software
that is installed on the company’s own
servers in their own IT centre. They will
probably have many other applications
DSMG 2009 22-48 b.indd 35
SaaS
Justin Wheatley, CEO of StatPro,
tracks the speed of change in the
data and technology provision to
asset management, and identifies
the importance of Software-as-a-
Service
of less importance that they run as well.
The result is that they have large IT teams,
complex processes and relatively high costs.
Some companies have tried to outsource
the whole thing to a third party such as a
custodian or IT services provider. However,
there are many horror stories that warn this
is not a simple solution. In fact the rule of
thumb is that if your IT department works
well and efficiently, you can outsource it, but
if it is inefficient you can’t. The outsourcer
cannot be expected to unravel your mess.
What has worked, however, is selective
outsourcing. This typically means getting
the supplier of your system to host
their own application. This makes sense
as the supplier ought to know how to
support their own product and if they
do this for all their clients, they can get
economies of scale which a generalist
outsourcer cannot hope to achieve.
The other factor is that Web 2.0 has
unleashed a new revolution in IT making it
possible for suppliers to provide ‘Software as
a Service’ (SaaS) solutions over the Internet
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 Investor Services Journal | Data Services Market Guide 2010
SaaS

and with relatively low cost. Incumbent

suppliers are reluctant to adopt this new Not worth the
technology as they fear cannibalisation of
their existing business and because they gamble
calculate that such is the complexity of the David Stewart of Misys puts risk
processes that surround their embedded
systems, clients will be loathed to move management in context
anyway. That leaves the door open for
start-ups, but this generation have a much
bigger battle than the class of ’95 as the
standards and functionality they have to
match are significantly higher and the gains
in efficiency are less about time and volume
and more about money. Clients want the
same for less rather than more for the same.

“Clients need to evolve

in a sensible direction”
This is the thinking behind StatPro’s
own strategy. We believe that eventually
all our clients will want to access their
services over the web just in the way that
we all use email rather than a fax (or telex,
or telegram). Indeed, email is fast being
superseded by instant messaging. However,
we also recognise that clients cannot simply
throw everything out and start again, but
rather need to evolve in a sensible direction
according to a plan that has been tried and
tested. The last thing anyone wants to do
is jeopardise their business for the sake of
saving a relatively small amount of money.
This means that we have focused on
I n the wake of fraud at Société Générale,
it’s clear that risk management will
remain a front-and-centre issue for a
deploying new services and products considerable period of time. What few
that offer quick savings for clients whilst expected was that risk would assume so
moving them towards the strategic objective critical a position so soon – especially one
of low-cost web-based applications. that would stretch beyond the trading
Many asset managers must be thinking world and into the broader economy. If
about SaaS as a way to reduce their costs, Société Générale wasn’t enough of a call
but the obstacle they will encounter is the for a broad review of risk practices, then
complexity of getting there and doing so surely the current financial crisis must
for a wide number of applications.n be – whether that review is self-triggered
or, as is now increasingly likely, imposed.
Justin Wheatley The crisis, building on the implementation
Chief Executive StatPro Group plc of regulations such as Sarbanes-Oxley, Basel
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 Investor Services Journal | DataSe rvicesMar ketGu ide2 010
II and others, is certainly changing the
playing field with regard to risk practices.
The next wave of debate centres on which
systems and processes are required to
successfully capture and interpret critical
data that exposes fraudulent actions, and
more importantly, potential for significant
losses. Some people feel technology is
the ultimate answer, while others feel
the systems in place are only as good as
the people implementing and overseeing
them. This often leads to an inappropriate
either-or: do we implement newer
systems (and how), or do we focus on the
internal data management and control
processes? Instead, we should ask: does
the “best practice” need to be better?
The answer is yes – to both. Only a truly
holistic approach that provides transparency
across the entire organisation can provide
a viable long-term solution to discovering
and managing issues before they reach
crisis level. This entails two items: first, a
significant evaluation, or reevaluation, of
internal monitoring processes, and second
of whether the control framework – often
deployed as a series of point solutions
coupled together by manual processes –
is effectively and properly integrated to
quickly provide staff with a complete view.
If the events at Société Generale
underscored one point it is that an
organisation can have some advanced risk
management technologies in place, but
when the right information is not getting
to the right person at the right time, results
can be disastrous. In terms of the broader
market meltdown, it is clear the drive for
profits helped foster an environment where
adherence to compliance became secondary.
Yet, in both cases, the primary challenge
was culture and organisational focus.
The key is transparency into and across
all business lines, between systems and
technology. A culture of compliance
supports strict monitoring and ensures
accountability in supporting any newly
DSMG 2009 22-48 b.indd 37
The Risk Management Challenge
implemented technology. Organisational
support guarantees that when a system flags
a problem, the individuals monitoring the
system understand their role in the risk
process, and the warning is managed in time.
Interestingly, many measures
designed to mitigate risk have actually
laid the foundation for heightened
risk in technology-enabled, high-
volume environments.
Traditionally, the three basic parts
of an organisation – front, middle and
back office – have been segregated. This
segregation was in fact a risk management
initiative designed to detach those who
make investment decisions from those who
had access to undisclosed data that could
potentially influence investment measures.
However, today’s technology has
evolved to a point that this approach no
longer mitigates risk, but in some cases,
establishes an environment that enables it.
Technology-enabled trading environments
drive increased volumes and introduce
complexities in the products, which
result in tremendous challenges for the
middle and back offices, and stress the
organisation’s control framework. With
the segregation of these functions, manual
processes become the glue that holds the
organisation together, and as a result,
regardless of the individual capabilities, we
have seen poor oversight and inefficiencies
in funneling data to control processes.
The solution is twofold. First of all, an
organisation must commit to a re-evaluation
of processes to ensure that risk is mitigated.
That commitment, on the ground level,
becomes operational in the form of ensuring
that control staff are senior enough to
identify and proactively manage issues in
a fluid, ongoing and proactive manner.
Second, it means that senior staff must take a
hard look at organisation-specific exceptions
– such as number of reversals by junior
traders booking trades against internal
counterparties – as well as exceptions that
37
16/04/2009 13:18
 Investor Services Journal | Data Services Market Guide 2010
The Risk Management Challenge
are relevant to the vast majority of trading
environments, including position limits,
exposures and other metrics that flag risk.
Certainly technology is a crucial factor
in addressing risk. Tower Group predicted
that global spending on risk management
will reach USD24 billion in 2009 as
financial institutions plan to address the
shortfalls in their risk management
capabilities. Technology should be viewed
as a solution enabler and not a constraint.
Adaptive and agile risk management
solutions exist today to enable a truly
holistic and transparent approach that
allows the front, middle and back offices
to communicate effectively with each
other. Such solutions also provide those
who are monitoring risks with complete
visibility and holistic insight into the
entire organisation and its processes. As
a result, when implemented properly,
comprehensive risk monitoring platforms
further provide a consolidated view of
exceptions across the organisation, breaking
down the data and risk silos that are the
inevitable result of running disparate
monitoring systems. They also provide
senior and accountable staff with an
effective view of the business’ adherence
to restrictions, mandates, regulations and
policies, trading, inventory and trader
limits, operational risk rules, credit, risk and
P&L limits, and variance from investment
strategies, among other obligations.
The key to successful deployment
is relatively mundane. The absolute
key component that contributes to the
effectiveness of a solution is the quality
of the data it processes. This means that
when the data model of a risk management
point solution is mismatched with the
trading system data model, latency and
risks of inadequate monitoring are
driven upward. These mapping issues
often lead to a lengthy and challenging
integration – the point at which many
systems deployment undertakings in our
38
DSMG 2009 22-48 b.indd 38
industry and others fail. And finally, there
is the point where processes and systems,
people and machines, come together. This
is certainly the key moment, because at that
intersection the eventual success or failure
of the overall initiative is determined.
The deployment of new systems can
– and should – be a natural ‘process
re-evaluation’ point for organisations. A
strong monitoring, control and compliance
platform should be sufficiently adaptable
to mould itself to an organisation’s
restrictions, policies, procedures. The
actual deployment of that solution then
represents a tremendous opportunity for
organisations to reevaluate the adequacy
of those processes. In other words, yes, a
risk monitoring platform should be able
to adapt to an organisation’s processes, but
that doesn’t mean those processes shouldn’t
also be called into question… Do they
accurately reflect the risks associated with
the current trade exposures and industry
thresholds? Were appropriately tailored
processes developed as the organisation
evolved into new business areas?
Additionally any organisation’s risk
monitoring platform implementation and
process re-evaluation must be supported
by a compliance culture, or it is a wasted
effort. Leadership, at the senior-most level,
must make risk mitigation and compliance
a personal mandate, and reflect that
commitment throughout the organisation.
Transparency, awareness and ownership
of risk, and a culture of compliance
that support key technologies, are the
foundation to a successful risk management
program that will hopefully shape the
future of the industry. Otherwise, even
the best system is simply an attempt
to paper over the problem. n
David Stewart is Director of Risk Solutions
in the Treasury & Capital Markets
division of Misys, the global application
software and services company.
16/04/2009 13:18
 Investor Services Journal | DataSe rvicesMar ketGu ide2 010
Working together through the
annus horribilis
A global financial crisis presents
a whole industry with common
challenges. Interactive Data
explains the benefits of
collaboration
DSMG 2009 22-48 b.indd 39
Vendor Collaboration
A s investment firms share common
issues and problems – and seek
common solutions to these problems
– many minds can make lighter work.
Resolving industry problems cannot be
left to individual firms or vendors alone.
A problem shared is a problem halved.
‘Collaboration’, or if you prefer, ‘co-
operation’ is becoming all the rage. Many
believe that more collaboration in the
data management industry could help
39
16/04/2009 13:18
 Investor Services Journal | Data Services Market Guide 2010
Vendor Collaboration
“Co-operation can well
be a viable option,
especially where there
is a common problem to
be addressed”
solve data collection and implementation
issues, and users often want to see more
collaboration between the vendors,
especially when it comes to hard-to-find
information. It is said that collaboration
could help to reduce risk, lower costs
and ensure the quality of the data.
Co-operation can well be a viable option,
especially where there is a common problem
to be addressed or an opportunity to be
grasped. So can co-operation between
various industry groups help to solve the
issues of different security identifiers,
business entity identification challenges
and corporate actions standards? Some
might say that co-operation between
these bodies – and that would mean
agreement across all those involved and
on a global basis – could now be deemed
as critical for the financial industry.
Standards abound
Co-operation between industry bodies
and working groups is, of course, already
taking place. In the corporate actions space,
co-operation is certainly proving effective
in identifying event-level attributes for
a limited number of corporate actions.
However, this co-operation may become
more complex as the number of parties
involved increases. Industry associations
generally prefer not to overlap in their work
to avoid establishing ‘competitive’ solutions,
although leaving the establishment of a
standard to one association may deprive
it of the valuable contributions that other
industry association members could make.
Many groups are currently working on
40
DSMG 2009 22-48 b.indd 40
standards, including the Securities Market
Practice Group (SMPG), the Market Data
Provider User Group (MDPUG), the
International Securities Association for
Institutional Trade Communication (ISITC),
the Reference Data User Group (RDUG), the
Asset Manager Forum’s Corporate Actions
Committee, the Association of Global
Custodians Corporate Action Task Force, the
Securities Industry and Financial Markets
Association (SIFMA) Corporate Actions
Division, the MiFID Joint Working Group
and XBRL International. Collaboration
between different associations could
provide the opportunity for any resultant
standard to be more widely adopted and
help enable product and service providers
to map their services to these standards.
Of course, a general consensus needs
to be achieved among industry bodies
at the outset of a standard’s launch as to
which would serve as the overall ‘owner’.
One industry association usually emerges
as the expert for the new standard,
and then additional groups step in to
supplement the progress made. For
example, the SMPG played a significant
role in defining how ISO 15022 messages
should be used given regional diversity,
while MDPUG advanced this cause by
publishing a set of principles. However,
there could be a drawback to such levels
of co-operation: the time and resources
involved to achieve 100% collaboration
could mean that by the time a standard is
implemented, it might already be outdated.
‘Thought leadership’ through collaboration
There are many examples of co-operation
among industry bodies: the Software and
Information Industry Association’s (SIIA)
Financial Information Services Division
(FISD), ISITC, ISO working groups, EDM
Council, MiFID Joint Working Group,
JWG-IT, securities market practice groups,
regulatory working groups including the
International Organization of Securities
16/04/2009 13:18
 Investor Services Journal | DataSe rvicesMar ketGu ide2 010
Commissions (IOSCO) and national
market regulators …to name but a few.
Take, for example, FISD. It was established
to provide a neutral forum for exchanges,
third-party providers, market data vendors
and financials services firms to address and
resolve issues related to the dissemination,
management, administration and use of
financial information. Members participate
in the FISD to exchange ideas, establish new
levels of mutual understanding and improve
the business climate associated with the
worldwide flow of financial information.
The MiFID Joint Working Group was
created by FIX Protocol Ltd, ISITC Europe,
RDUG and SIIA/FISD to address the
IT-related issues raised by the Markets in
Financial Instruments Directive. These
associations, whose members come from
all sectors of the financial services industry,
pooled their efforts to develop best-
practice recommendations, appropriate
standards and increased industry
awareness to help market participants
achieve compliance with MiFID.
A further example is the JWG-IT, an
independent think-tank that helps financial
institutions define workable solutions to
the challenges posed by EU regulatory
change. JWG-IT Special Interest Groups
aim to provide neutral ‘safe’ platforms
for like-minded firms, vendors and
professional service firms to help develop
practical IT infrastructure solutions to
resolve MiFID compliance problems.
Interactive Data’s Bob Cumberbatch is
currently chair of the JWG-IT Technology
Special Interest Group (TechSIG) created
for technology vendors to understand how
and where their products fit in the solution
stack. The group aims to create vendor
agnostic technical reference solutions;
encourage the formation of technical
reference implementations; have a proven
reference solution ready for when the
firms need it and engage in higher level
discussions earlier in the sales cycle.
DSMG 2009 22-48 b.indd 41
Vendor Collaboration
“Business entity or
counterparty data is
vital to help firms meet
their requirements for
risk management”
TechSIG is currently considering the
implications of the Financial Services
Authority’s consultation papers CP08/22
‘Strengthening liquidity standards’ and
CP08/24 ‘Stress and scenario testing’, due
to come into force from October 2009.
Interactive Data believes that there is a
significant level of co-operation among
the various organisations with which
it works. Although no one body works
entirely on its own, each represents its own
constituents and seeks to meet the needs of
its member companies. A siloed approach
could result if one particular industry group
feels the impact of a problem more than
another. In this situation there may be no
alternative as there are different problems
and opportunities to be addressed.
Bob Cumberbatch believes that as a result
of MiFID and the joint working group the
level of co-operation, especially between UK
firms, has increased. UK firms are talking
about the issues and problems that they face
in order to come up with shared approaches.
There is definitely a willingness to talk
about non-competitive issues, to share
problems and identify common solutions.
Co-operating for best practice
Interactive Data has an excellent track
record of working with other vendors and
firms to help address industry problems
and create opportunities for its clients.
Interactive Data works with more than
250 software and applications vendors
in order to help deliver data and services
in the preferred format of its clients.
Interactive Data has also formed alliances
41
16/04/2009 13:18
 Investor Services Journal | Data Services Market Guide 2010
Vendor Collaboration
“Members participate
in the FISD to exchange
ideas, establish new
levels of mutual
understanding and
improve the business
climate”
with numerous firms to bring to market
innovative new services including its
award-winning corporate actions data
delivered in ISO 15022 format. Working
with software vendors in this way can help
ensure that data flows seamlessly into client
applications and is correctly represented.
This can help to reduce risks and timescales
for firms seeking an automated solution
for corporate actions processing and
help reduce their operational risk.
To launch its business entity data
service in 2006, Interactive Data formed
alliances with two specialist vendors of
entity data, Avox and CounterpartyLink.
Business entity or counterparty
data is vital to help firms meet their
requirements for risk management and
compliance under regulations such as
UCITS III, Basel II/Capital Requirements
Directive (CRD) and MiFID.
Also in 2006, Interactive Data’s Pricing
and Reference Data business and Markit
Group Limited formed a strategic alliance
in the corporate and government bond
valuation marketplace. The alliance
supported the evolution of corporate
bond valuations by allowing Interactive
Data to use Markit’s credit default swap
(CDS), credit index and bond pricing data
within Interactive Data’s corporate and
government bond evaluation models.
This integration of pricing data
across related asset classes augmented
existing data sources already used by
42
DSMG 2009 22-48 b.indd 42
Interactive Data’s international teams
of evaluators in the interpretation of
the markets, providing visibility to
new areas of the credit markets and
permitting a broader array of comparative
analyses for the benefit of its clients.
With increased demand for independent
valuations of complex OTC derivatives
and structured products as a result
of a combination of new regulations,
market volatility and the credit crunch,
Interactive Data’s Pricing and Reference
Data business recently entered into an
exclusive agreement with Prism Valuation,
which provides services that replicate the
pricing and risk analysis capabilities of a
structured products dealer, with an emphasis
on hard-to-value assets. Interactive
Data now offers its clients valuations
of highly complex OTC derivatives and
structured products as part of its wide-
ranging pricing and evaluation services.
Such examples of co-operation with other
vendors enable Interactive Data to combine
its instrument reference data, pricing and
evaluations with other specialist data or
service providers with the overall aim of
offering its clients the services they need.
Interactive Data Corporation (NYSE:
IDC) is a leading global provider of
financial market data, analytics and
related services to financial institutions,
active traders and individual investors.
The Company’s businesses supply real-
time market data, time-sensitive pricing,
evaluations and reference data for millions
of securities traded around the world,
including hard-to-value instruments.n
www.interactivedata.com
This article is provided for information
purposes only. Nothing herein should be
construed as legal or other professional
advice or be relied upon as such.
16/04/2009 13:18
 Investor Services Journal | DataSe rvicesMar ketGu ide2 010
Market Comment: Guy Kirkwood, Unisys
O utsourcing is not a panacea for all the
challenges facing businesses. However,
it can help organisations to reduce costs,
streamline operations and processes and
increase productivity, if done correctly.
The outsourcing market is maturing
beyond the traditional large single source
IT Outsourcing (ITO) and Business
Process Outsourcing (BPO) engagements
to a multi-sourcing environment where
the client manages relationships with a
number of service providers based on
best of breed experiences. This trend will
mitigate against outsourcing suppliers
taking on work they don’t have the necessary
expertise and capacity to carry out.
The market is beginning to experience
a decline in the number of mega-deals
for a concomitant increase in smaller
engagements involving a larger number
of (nominally competing) service
providers. This in turn has led to a greater
involvement of third party advisors and
specialist sourcing companies as clients
seek to increase business agility and
sourcing proficiency. Increasingly a closer,
more reciprocal relationship between
the outsourcing provider and third party
advisor is required that ensures stronger
governance and accountability. In this more
heterogeneous environment, the advisor acts
as a trusted advisor to the client, stringently
reviewing the providers’ performance and
ensuring that the outsourcing contract is
open, honest and much less likely to fail.
As this model develops within
outsourcing engagements we will see the
emergence of a new role, and maybe new
organisations, in which project management,
service delivery management, security and
relationship governance across multiple
service streams and providers is pulled
together. The role, or organisation, will
act as the central hub, whose job it is to
DSMG 2009 22-48 b.indd 43
Market Comment
Duncan Tait (pictured),
Vice President and
General Manager for
the UK, Middle East and
Africa at Unisys, adds:
“Forty per cent of
our business is now
in financial services. When talking to
the CEOs of companies about our BP
Outsourcing,they are looking for two
things: the cost, and how it will improve
management. A few years ago banks
would say: ‘don’t talk to us about a shared
service and cutting costs’ as they, at the
time, put more money into growth. Now
there is pressure for capital adequacy,
but the outsourcing solution won’t need
GBP50 million – it can be staggered
from a contract with a third party.”
ensure the liability and responsibility of the
various suppliers. This takes the pressure
away from the client’s business, which
might already be struggling with limited
resources and finding the experience of
running multiple procurement processes
and their on-going delivery, too much to
handle. This streamlined structure is most
conducive to the smooth running of an
outsourcing programme and promises
optimum visibility, good communication
and a uniform commitment to meet
and even exceed the original business
objectives of the engagement.
Within this environment, outsourcing
underpinned by good governance and a
will to share value added services will not
only avoid failure, but deliver significant
competitive advantage. This model will
mark a less selfish era what is a relatively new
outsourcing history and a move to a more
open and collaborative way of working.n
43
16/04/2009 13:18
 Investor Services Journal | Data Services Market Guide 2010
Ask the Experts
Keep the customer satisfied
Good systems and thorough oversight can be the difference between
keeping investors and seeing them take flight, writes Robert J. Miller, CEO
of CorrectNet
T he big bet for alternative asset managers
is whether or not they can attract and
retain institutional assets. Institutional
investors have become smart, disciplined
and more demanding, and asset managers
must demonstrate that they have the
operational arsenal required to support and
manage big allocations. The competitive
differentiator will be their ability to shift
to a client-centric operating model versus
the traditional investment-centric model.
Today, institutional investors demand
that their asset managers have operating
platforms that satisfy their increased and
ongoing risk management policies which
include deeper diligence and monitoring of
investment, operational and counter-party
risk. To achieve a client-centric approach,
firms must first have an organizational
vision that balances the complex interplay
between client-driven needs for performance
44
DSMG 2009 22-48 b.indd 44
with the emerging need to provide a
high-level of operational transparency,
information flow and tools to help the
investors manage their total investment risk.
To accomplish this, firms must, in effect,
“institutionalise” the way they manage and
deliver information to clients. However,
from an organizational perspective, few
firms have the talent and resources to
execute on the changes necessary to meet
client expectations without help. Their
technology resources are already thin, the
business line is being cut, and the process of
identifying, selecting and managing external
resources that might have the required
knowledge and bandwidth is fraught
with risk. Agility and the ability to create
leverage in both internal and outsourced
resourcing strategies is a key success factor.
So what does it mean to “institutionalize”
data delivery? From the moment an asset
16/04/2009 13:18
 Investor Services Journal | DataSe rvicesMar ketGu ide2 010
Ask the Experts

manager generates $1 of profit or loss, are now looking deep below the covers
the firm is in the information delivery to assure that a firms’ operating platform
business. This one bit of data will inform is capable of meeting their demands
and feed everything from business in a reliable, accurate and controlled
performance management, accounting, manner. Increasingly, the answer lies in
marketing of products, competitive outsourcing the client reporting function
positioning and decisions by investors to a managed service that delivers secure,
to invest or redeem. Drill down further, global, flexible support, while at the
and you willconsolidation
Industry see that this pieceinofbothdata isthe assetsame time enablingand
management 100%hedge
transparency
fund
moved around hundreds of times into into the process, controls, and context
space is another driver of technology spend. Mergers will create larger
different systems – risk, performance, behind the information being delivered.
firms thatbenchmarking,
attribution, have greater amounts
etc. – and of capital to spend
Looking ahead,on thetechnology.
battle for assets,
Over the last 5 years, the number of acquisitions has generally
published in dozens of forms. If the firm specifically institutional trended
allocations, will
does not have an automated and disciplined be fought based
upwards. Following a dip in 2007, there was a large spike in M&A activ- on operational excellence
approach to aggregating, enriching, quality and not just based on returns. The firms
ity in 2008.
control, Hedge
publishing andfund consolidation
distributing this isthat
being facilitated
successfully by and change the
innovate
acquisitions
information, theyofwill
alternative
not be able investment
to satisfy firmson
game bytheir
larger financial
information institu-
delivery and
the demands
tions of client
including reporting banks
universal investors. reporting
and large assetprocess will realize
managers. M&A significant cost
Institutional
activity alsoclients
creates do, demand
and will continue savings,
for IT because a redirection
acquirers of client
need service teams
to assimi-
to, demand more content, delivered more from low-value activities to higher impact
late acquisitions
frequently, technologically.
at high levels of quality, more Consolidation increasesfunctions,
client communication the needincreased
for
an integrated approach
context-informed to technology
and made available in with
clientcommon
satisfaction,products, systems,
reduced reputational
the
andcustomized
standards formats
acrosstheybusiness
require to units. However,
and regulatory
marketrisk exposure, and a more
consolidation
make their investment management process agile and competitive organisation. n
may also prompt reviews of spending to streamline operations and
more efficient. The most desirable investors
costs, diminishing technology demand.

Figure 5: Asian Investment Management Industry Consolidation

Asian investment management consolidation
Asian Investment Management Industry
Consolidation
30
30
outright acquisitions
acquisitions

25
25

20
20
Numberofofoutright

15
15

10
10
Number

55

00
2004
2004 2005
2005 2006
2006 2007
2007 2008
2008

SOURCE: Bloomberg
Source: Bloomberg

45
As the Asian investment management industry grows and more new
players enter the market, firms are looking for ways to remain compet-
DSMG 2009 22-48 b.indd 45 16/04/2009 13:18
itive. Firms are turning to advanced technologies to give themselves an
 Investor Services Journal | Data Services Market Guide 2010
Company Profiles
Overview
Transforming technology
into business solutions.
Eagle Investment Systems LLC is a global
provider of financial services technlogy,
serving the world’s leading financial
institutions. Eagle’s Web-based systems
support the complex requirements of
firms of any size including institutional
investment managers, mutual funds,
hedge funds, brokers, public funds, plan
sponsors, and insurance companies.
Eagle is committed to providing
enterprise-wide , leading edge technology
and professional services for investment
accounting , data management, and
performance measurement. Eagle’s produt
suite is offered as an installed application
or can be hosted via Eagle ACCESS,
Eagle’s application service provider. Eagle
Investment Systems is a division of The
Bank of New York Mellon Corporation.
Key Services
Eagle offers an array of web-based
technology solutions for investment
firms of every size, including:
Investment Accounting: an investment
accounting system offering a robust set of
core investment accounting functions to
support the unique portfolio accounting
requirementsof institutional institutional
46
DSMG 2009 22-48 b.indd 46
investment management firms, mutual
funds, hedge funds, brokers, public funds,
plan sponsors, and insurance companies.
Data Management: a strategic solution
to an organisation’s data management
challenges, which can serve as the
foundation for future data management
initiatives. Eagle’s data management
solution helps organisations consollidate,
translate, validate and disseminate
clean and accurate datathroughout the
enterprise and helps to establish a data
standard, which can result in additional
cost savings and reduced operational risk.
Performance Measurement: an
investment solution designed to support
an organisation’s performance initiatives,
including portfolio performance,
GIPS composite management,
performance attribution, mutual fund
performance, and index management.
The solution architecture provides
flexibility in calculations, exception-
based audits, drill down analysis, and
multiple classification schemes.
www.eagleinvsys.com
T: +44 (0) 20 7163 5700
F: +44 (0) 20 7163 5701
A: The bank of New York Mellon
Financial Centre
160, Queen Victoria Street
London
EC4V 4LA
16/04/2009 13:18
 Investor Services Journal | DataSe rvicesMar ketGu ide2 010
Company Profiles

Company Brief
Interactive Data Corporation (NYSE:
IDC) is a leading global provider of financial
market data, analytics and related solutions
to financial institutions, active traders
and individual investors. The Company’s
businesses supply real-time market data,
time-sensitive pricing, evaluations and
reference data for millions of securities
traded around the world, including hard-
to-value instruments. Many of the world’s
best-known financial service and software
companies subscribe to the Company’s
services in support of their trading, analysis,
portfolio management and valuation
activities. Interactive Data, headquartered
in Bedford, Mass., has approximately 2,400
employees in offices located throughout
North America, Europe, Asia and Australia.

Key Services
Through its businesses, Interactive
Data’s services include:
• Historical, end-of-day and intra-
day pricing and reference data
• Independent daily evaluations for
approximately 2.5 million fixed Key Locations
income and international equity issues Europe: Cologne, Dublin, Frankfurt, Ge-
• Valuations of highly complex OTC neva, Glasgow, Helsinki, Jersey CI, London,
derivatives and structured products Luxembourg, Madrid, Milan, Paris, Rome,
• Groundbreaking Fair Value Zürich
Information Service
• Fixed income portfolio analytics USA: Bedford, MA (Corporate HQ), Boston,
Chicago, Houston, Los Angeles, Miami, New
• Low latency and ultra low York, San Francisco
latency global market data
Asia Pacific: Hong Kong, Melbourne,
• Customised and hosted Singapore, Sydney, Tokyo
managed solutions
Key Contact:
• eSignal’s streaming, real-time market Bob Cumberbatch
data, news and analytics for professional Tel: +44 (0)20 7825 8000 Email:
traders and active individual traders robert.cumberbatch@interactivedata.com
www.interactivedata.com

47

DSMG 2009 22-48 b.indd 47 16/04/2009 13:18

 Investor Services Journal | Data Services Market Guide 2010
Company Profiles
SunGard is one of the world’s leading
software and IT services companies. SunGard
serves more than 25,000 customers in more
than 70 countries, including the world’s
25 largest financial services companies.
SunGard provides software and
processing solutions for financial services,
higher education and the public sector.
SunGard also provides disaster recovery
services, managed IT services, information
availability consulting services and business
continuity management software.
With annual revenue exceeding $5 billion,
SunGard is ranked 472 on the Fortune 500
and is the largest privately held business
software and services company on the
Forbes list of private businesses. Based on
48
DSMG 2009 22-48 b.indd 48
information compiled by Datamonitor*,
SunGard is the third largest provider of
business applications software after Oracle
and SAP. Continuity, Insurance & Risk has
recognized SunGard as service provider of
the year an unprecedented five times.
Headquartered in Wayne, Pennsylvania,
SunGard has 20,000 employees in more
than 200 cities and 30 countries.
SunGard is comprised of four businesses
- Availability Services, Financial Systems,
Higher Education and Public Sector - that
provide IT services and infrastructure,
and software and processing solutions.
Visit SunGard at www.sungard.com
16/04/2009 13:18
EA-191 2i media ad (A5):Layout 1 4/15/09 11:37 AM Page 1

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