01.30.2012

Dialing Up Data

01.30.2012
Terry Flanagan

Capital markets firms challenged to turn bits into information.

Data issues are increasingly rising to the top of the agenda for capital markets firms.

“There’s a growing realization that the enterprise data management problem is not only getting bigger but can no longer be pushed back because of cost constraints,” Chris Pickles, head of industry initiatives at BT Global Banking & Financial Markets, told Markets Media.

“Regulators and legislators have started to recognize there’s a lot of data floating around financial institutions which is not being managed as information,” Pickles said.

The collection and management of a multiplicity and diversity of market data across assets and continents is not an easy task.

“Financial practitioners’ worst fears are spending more time processing and cleansing data than analyzing it,” Louis Lovas, director of solutions at OneMarketData, told Markets Media.

The challenge of this data dump is dealing with the vagaries of multiple data sources, mapping ticker symbols across a global universe, tying indices to their constituents, tick-level granularity, ingesting cancellations and corrections, inserting corporation action price and symbol changes and detecting (missing) gaps in history, said Lovas.

“With 4.55 billion contracts traded in 2011, the options markets volume and velocity place enormous demands on IT infrastructure,” Lovas said. “As more and more firms engage in cross asset trading, the resulting information flood underscores the need for Big Data technology.”

Firms are being tasked to identify cross asset correlations and understanding how to best hedge a position to offset risk, which form are the underpinnings for trade models and portfolio management.

The presence of silos, or buckets of asset classes, complicates the task of managing the ever-growing streams of real-time data flowing through markets.

These silos tend to develop not organically, but rather around specific business initiatives, such as an investment firm deciding to launch a new trading division.

“Data management in theory should take place at the enterprise level, but the reality is that data is still siloed within financial institutions, said Pickles. “The successful firms will be the ones that figure out how to share this information, using technologies such as cloud-based computing.”

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