July 2014 waterstechnology.com/ird Reference Data Technology Special Report

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Eagle Investment Systems LLC, a leading provider of technology, is a division within BNY Mellon Asset Servicing and is a wholly owned subsidiary of The of New York Mellon Corporation. ©2014 Eagle Investment Systems LLC. All rights reserved. Editor’s Letter Fluid Playing Field The thought leadership provided in this special report on reference data technology makes a good complement to the coverage in the July issue of Inside Reference Data. As outlined in the issue’s “Golden Copy,” sharing the burden or responsibility for data management tasks is a smart path to innovation and progress on the handling of data. The data experts who contributed to this report’s Virtual Roundtable also point to the need for greater agility in responding to business demands with data management solutions. Eagle Investment Systems’ Paul McInnis states that firms are seeing the difficulty of predicting what they need from their data and therefore must keep data management solutions flexible. SmartStream’s Adam Cottingham emphasizes that data is an asset but is often under-processed and not shared. Still, ANZ Institutional Bank’s Mark Bands reminds us that innovation and collaboration, particularly with reference data technology, do have to take place within certain bounds. Data management platforms must integrate with different data vendors, legal entity identifier administrators, and know-your-customer data providers, as well as manage counterparty data and keep identifications synced. Increased data volumes and storage options, including the cloud, have created demand for data solutions that can support enterprise data management strate- gies, McInnis also notes. He confirms that data governance is getting greater emphasis, drawing on firms’ business management to be more involved in data management decisions. This squares with consultant Rares Pateanu’s observa- tions in our regular issue about centralization of data governance continuing to challenge many in the industry. The business and operational climate, as these experts see it, is now fluid enough to allow innovative changes in reference data technology to occur.

Yours sincerely,

Michael Shashoua Editor, Inside Reference Data Email: [email protected], Tel: +1 646 490 3969

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FEATURES NEWS 8 Virtual Roundtable 6 Collibra Offers Data Stewardship Inside Reference Data Automation gathers together leading data management professionals to 6 SunGard Launches Risk Reporting discuss the latest advances in Service for Hedge Funds reference data technology 7 AIM Commits to Three-Month, 14 Q&A Fixed-Price Implementations Indrajit Chatterjee, senior manager of wealth management 7 News Download technology solutions at Scotiabank in , tells Inside Reference Data how regulation has pushed reference data technology towards holistic enterprise-wide views

July 2014 waterstechnology.com/ird Reference Data Technology Special Report

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waterstechnology.com/ird July 2014 5 News Review Collibra Offers Data Stewardship Automation Data management automation provider can’t see what people are doing and Collibra has launched its new Financial you can’t track who’s doing what.” Services Suite, supporting its Data With the Suite, Collibra has set out to Governance Center platform and address data stewardship by assigning making it possible to automate data roles and responsibilities for data to stewardship processes, according to different business units and estab- company officials. lishing workflows for defining data “Typically, there’s a core data gover- elements, or approving new reference nance group that coordinates data data elements, explains Verhaeghe. governance actions,” says Benny “If there’s no responsibility assigned, Verhaeghe, vice president of sales the software can automatically go a and marketing at Collibra. “If this is level higher in the organizational struc- not automated, people meet and send ture and find the steward or whoever emails to each other—there’s no stan- responsible at the higher level to pick dard process established, and the result up where this was left,” he says. is there’s no auditability because you Michael Shashoua

SunGard Launches Risk Reporting Service for Hedge Funds

Financial industry operations software equity and specialized credit funds. and services provider SunGard has Users of the service upload posi- launched a new risk reporting service tion information via a secure SunGard for hedge funds, providing indepen- network. The data is validated by dently validated data and analytics. SunGard’s managed service team The Hedge360 Risk Reporting against SunGard APT’s risk model data- Service provides detailed risk attribu- base, to highlight exceptions or queries tion and stress testing, as required by quickly before proceeding to the risk regulations such as the Alternative engine for overnight report generation. Investment Fund Managers Directive The service is available to hedge funds in Europe. that are not already users of SunGard’s Risk reports can also be customized Hedge360 platform. for commodity strategies, long/short Nicholas Hamilton

6 July 2014 waterstechnology.com/ird News Download AIM Commits to Three-Month, Markit, Genpact Unveil KYC Services Fixed-Price Implementations Data services provider Markit and business process and technology Enterprise data management (EDM) soft- provider Genpact have launched ware provider AIM Software responded their joint know-your-customer in May to the open-ended nature of some (KYC) services. Markit-Genpact implementation projects by announcing KYC Services are intended to help that its pricing and corporate actions applica- users streamline client onboarding tions could be implemented by August for a and reduce costs, by centralizing fixed price. the collection and management of In October 2013, AIM launched the GAIN KYC data. The new services build Portfolio Pricing application, which scrubs on existing capabilities of both and validates pricing data and the GAIN providers, including Genpact’s Corporate Actions DM application, which Remediation as a Service platform processes corporate action announce- and Markit Counterparty Manager ments. The applications have since been implemented at a wealth manager and asset DTCC, Euroclear Collaborate manager in a three-month period and within on Collateral Processing a pre-negotiated budget. AIM now says it can The Depository Trust and implement the applications at other financial Clearing Corporation (DTCC) and institutions within the same period and for a Euroclear are planning a utility fixed, pre-negotiated price. that will provide straight-through Michael Walford-Grant, AIM’s London- processing (STP) of margin obliga- based country manager, says AIM had focused tions and a utility for sub-optimal on building solutions in response to the speci- collateral mobility and allocation, fications of individual clients. But its new to be operated as a joint venture. application-based approach has allowed it to The Margin Transit Utility respond to customers’ desires for vendors to (MTU) is intended to provide STP be clear about the time and cost of implemen- for agreed margin calls, while the tation. “As there are so many less unknowns Collateral Management Utility [when implementing an application], we can (CMU) is planned to enable users be much more specific and make these sorts to consolidate their assets in a of commitments,” says Walford-Grant. single inventory and collateral Nicholas Hamilton management system.

waterstechnology.com/ird July 2014 7 Virtual Roundtable Driving Forces Inside Reference Data gathers together leading data management professionals to discuss the latest advances in reference data technology

What is the climate for reference There’s no question data quality and regu- data technology decisions as you see latory demands continue to be relevant it? Are regulatory concerns promi- factors in driving technology decisions. nent or is a desire for data quality Certainly, the need to evaluate risk and driving decisions on its own? provide transparency is a central compo- Mark Bands, data management stream nent of the regulatory changes impact- lead, OTC derivatives reform program, ing the industry right now. In that vein, ANZ Institutional Bank: The climate is there seems to be a bigger picture theme hot and harried! Significant over-the- emerging in what is driving technology counter derivatives reforms and regula- decisions overall. Firms are collectively tory concerns in the Asia-Pacific region realizing their data management solutions are driving data technology decisions. A need to be more agile to support current lot of the decisions in the region to date and future business demands. Given the have largely come in the tactical form, volatile market and regulatory environ- but I am seeing a progression to more ment all asset managers weathered in strategic solutions that provide a central recent years, many firms now recognize it counterparty data store for global regula- is difficult to predict what they will need tory classification and OTC trade report- from their data and are therefore seek- ing. Data quality is a natural by-product ing data management solutions that are of the regulations and forms a significant flexible enough to support any number part of the challenge and the decision on of data requirements and enable them to the strategic platform of choice. attain true data stewardship.

Paul McInnis, data management prod- Adam Cottingham, vice president, utili- uct manager, Eagle Investment Systems: ties and services, SmartStream: High-

8 July 2014 waterstechnology.com/ird quality and timely reference data is critical to realizing effective regulatory reporting. The burden of forthcoming regulations highlights that passive data management processes hard coded in legacy environments and often Paul McInnis, managed in silos do not give a complete Data Management and transparent picture of how data is Product Manager, Eagle related across the data types of legal Investment Systems entity, security, pricing and associated +1 781 943 2200 corporate actions. eagleinvsys.com Key initiatives relating to the LEI detailed in the Dodd-Frank Act and EMIR [European Market Infrastructure for the capture and management of Regulation] are highlighting the impor- client and counterparty data for global tance of understanding legal entity rela- regulations, supporting today’s require- tionships, while Basel reporting clearly ments and a commitment to support demands that integrity across security future regulation. data needs to be established to effectively t Ensuring the technology of choice identify instruments and their categoriza- can manage integration with all data tion. These requirements and many more vendors available on the market, such sit hand in hand with the standards the as DTCC/Avox, local operating units businesses funding data management in for legal entity identifiers (LEI), Markit firms require—complete coverage, accu- for Protocol 1.0 and Protocol 2.0 and racy, timely representation of events and the soon-to-be providers of know-your- effective identification. Technology is customer (KYC) data. secondary to achieving these goals. t The ability of a technology platform to manage the push and pull of client What are the greatest reference and counterparty data around an orga- data complexities that have a bear- nization, ensuring all IDs and client ing on technology decisions? states are in sync. Bands: From my perspective, the great- t Data migration from legacy data plat- est reference data complexities on tech- forms to one golden repository. nology decisions are: t Finding a single platform that allows McInnis: Again, flexibility is the driv-

waterstechnology.com/ird July 2014 9 Virtual Roundtable

ing theme. Complexities such as evolv- a complete overhaul of a firm’s existing ing data standards like FpML and LEI, systems. require flexible solutions for data inte- gration and storage. Further, the need to What is the current status of using be able to efficiently integrate a variety cloud computing technology for of data sets and structures is now driv- reference data management and ing the requirement for a comprehensive operations? Has it changed a lot or firm-wide data management strategy will it continue to change? and solution. As a result, many firms are Bands: We have moved beyond the taking a step back and evaluating their “early” definitional challenges associ- overall data governance policies. ated with the cloud that were very much part of the dialogue in 2009–10. Where Cottingham: Data is a corporate asset that we moved to, though, is a broad recog- is often under-processed, not shared and nition of how cloud technology can restricted by legacy technology. Today, support the management of reference data stewards operate in an environment data, but that there are a number of chal- of austerity. This mood is enforced by lenges yet to be surmounted before the many technology initiatives failing to real- technology or opportunity gains wider ize their goals, let alone keep pace with the adoption. For example, I have heard of changing nature of data. The complexity a number of firms outsourcing and using of applying quality standards for cover- the cloud in their reference data worlds. age and accurate data, along with timeli- These “cloud” deployments tend to be ness parameters of applying data changes in private clouds though, which isn’t caused by market events, and having new truly externalizing the key counterparty data available on time, means consumers repositories. Most institutions want to of data throughout a firm are skeptical that keep their master counterparty data only a technology solution or purchasing inside the firewall. more data will meet their needs. Business sponsors of data management McInnis: The cloud is here to stay. initiatives are becoming increasingly Modern cloud computing technology focused on realizing cost-effective results presents a tremendous opportunity from new initiatives. The goal of having for financial firms to bring solutions to the data you need, on time and correct, market faster. Further, cloud computing is a simple one that can be achieved by technology has created significant oper- accommodating a utility model without ational and cost efficiencies for firms, as

10 July 2014 waterstechnology.com/ird they can move away from large upfront capital expenditures on IT infrastructure and personnel to a variable cost model based on consumption. The main focus for cloud computing Adam Cottingham, technology providers will be data security. Cybersecurity preparedness needs to be Vice President, Utilities and a part of any business’s technology infra- Services, SmartStream structure. The cloud providers that invest +44 207 898 0600 heavily in staying on top of data security +1 212 763 6500 and ahead of cybersecurity threats will be smartstream-stp.com the most successful. Finally, cloud-to-cloud integration is a necessary capability. Not all data is or likely application of market events that origi- will be stored on one cloud, so enabling nate instruments and represent changes integration between clouds and having a in data structures. holistic data management solution that will Data management in the cloud needs to provide a clear and accurate picture of all be underpinned by core technology capa- the data across the business will be vital to bilities that include multi-tenancy and successful data management. robust workflow capabilities coupled with client controls and flexible data integra- Cottingham: The movement of data tions. Upon these technology principles, management towards the cloud is acceler- processes can be mutualized in accor- ating, enabled by technology innovation. dance with data licenses and standards Whilst the viability of a cloud strategy for promoted throughout the industry. data management can be based on tech- nology offset, these results are limited to Has an increased volume of reference a short-term IT cost saving that does not data, and more types of data being address why a financial institution invests included in reference data manage- in data management in the first place. ment, affected technology decisions, More importantly, a cloud strategy that and how? supports mutualized practices can focus Bands: Absolutely. To slightly misquote on achieving more with less by enabling Grace Jones, “We’re all slaves to the market practices of primary sourcing rhythm.” The past four years have seen and industrial-level processing for timely a high-tempo rhythm of regulatory pres-

waterstechnology.com/ird July 2014 11 Virtual Roundtable

sure around clas- data governance, which requires the sifi cations, KYC, involvement of the business’ manage- anti-money laun- ment and not just the IT professionals in dering and trade technology and data management deci- reporting, all of sions. As a result, management, or the which have pushed business owners, will be best served to the requirement for identify a proven and experienced tech- concise reference nology partner that can provide them Mark Bands, ANZ Institutional Bank data through the with the toolsets necessary to be able to roof. I can’t see this easily leverage the data across the fi rm changing any time to make better business decisions. soon. With this demand, the technology decision becomes centered on vendors Cottingham: Increasing volumes of who focus on regulation and provide a data are a key pressure on operations future-proofed and extendible regulato- departments. Increased volumes stem ry focused reference data platform. The not only from the need to add additional recent industry recognition of Fenergo feeds to cater for evolving operational and its rules-driven entity data manage- requirements, but also from the prolif- ment platform (Fenergo won two IRD eration throughout fi rms of duplicated Awards in May) is a good example, and data, which not only increases pressure validation of this growing focus. on storage but also creates divergent versions of the truth that exacerbate McInnis: Yes. The increased volume of the workload. data and the variability of storing both The golden copy approach often structured and unstructured data have falls victim to disassociated projects resulted in fi nancial fi rms seeking out which lead to holding multiple golden solutions that can easily integrate, vali- copies, all managed independently. date, enrich and support their enter- In many cases, technology can be the prise data management strategy. Also, cause of increased volumes, rather than with the increase in data volume and a solution. number of sources of data, data lineage Where data is being added to an exist- has become extremely important in ing operation, the increased volume is order to provide transparency. also not the only challenge to face— From a decision-making standpoint, often the integration of the new data (be fi rms are placing a greater emphasis on it from a new source or an extension of

12 July 2014 waterstechnology.com/ird the service being taken from an existing to integrate systems. Integration is not source) is an insurmountable obstacle. just the data plumbing between systems, Firms are as a consequence becoming but also includes the ability to validate, more attuned to the requirement for a enrich, aggregate and report using busi- centralized data policy but have strug- ness rules that are managed as close to gled to implement one using traditional the operations teams as possible, ideally deployed technology, despite the best outside of the IT organization. From a big efforts of the industry. picture standpoint, standardizing data points creates a common understand- What are the newest innovations and ing that will dramatically reduce the technology for reference data? Is complexities and cost of data integra- identifier implementation the only tion activities between various systems. area or main area driving changes? These initiatives are absolutely critical Bands: Given my role as a regulatory to implementing a successful data gover- data traffic controller, I look to vendors nance framework. who focus on giving me the regulatory solutions pre-configured and provide Cottingham: Technology should be an integrations to the main market play- enabler for effective data governance, ers that help make the overall solution and the market is starting to focus not for my bank easier to deploy, simpler to just on the importance of cross referenc- manage and, in the end, cheaper. ing identifiers to make data standardiza- tion through a firm and the industry but McInnis: Common identifier is one area also other exciting innovations. These driving change, but common taxonomies, include seeking cost-effective access like FpML, are also critically important. to primary source data to enrich exist- Once data points such as identifiers are ing data vendor sources, and looking at standardized, firms are also recognizing the data in a holistic manner, whereby a the need to marry these common indus- market event provides insight into how try definitions with internally agreed an entity and its associated security is upon ones for their own data (e.g. busi- originated or changed. These approach- ness definitions, business ontologies or es are important when they are applied business data dictionaries). at the start of the data processing chain, Firms that are at a distinct advantage because they offer timely solutions to to achieve true data lineage requirements reduce costly processes of correcting are the ones that use a canonical model and remediating data downstream.

waterstechnology.com/ird July 2014 13 Q&A Wider Worlds For Data Indrajit Chatterjee, senior manager of wealth management technology solutions at Scotiabank in Toronto, tells Inside Reference Data how regulation has pushed reference data technology Indrajit Chatterjee towards holistic enterprise-wide views

How is reference data technology ous demand on resources and budget. evolving overall? Most firms, however, are no longer look- The industry must now comply with a ing at just being compliant and are instead variety of regulations. The high qual- harnessing data to achieve a competitive ity of data required for reporting to advantage in market segments. Firms are address the regulatory baseline has looking at data infrastructure investments further propelled the mandate for supe- with amortization over the next five to 10 rior data governance and centralizing years with positive net present value and from siloed data sets where possible. also long-term benefits. Reference data technology is evolving towards a holistic 360-degree enterprise How are efficiency and cost-savings view of data instead of disparate data set concerns and efforts interacting or views, and has expanded its portfolio to affecting each other in firms’ refer- include securities, positions, transactions, ence data technology choices? customers, and counterparties. Every firm has to effectively address regu- latory costs. With small budgets, firms are Are firms successfully capitalizing forced to consider nimble approaches to on compliance needs to review and address data needs across the enterprise. update data platforms? Reference data technology choices are Firms across the financial sector are shifting from point-to-point solutions to moving away from point-to-point tactical an overarching holistic view, which aligns solutions towards a more holistic enter- with long-term business objectives of prise approach, which has put a strenu- better data quality and governance.

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