02.09.2012
By Terry Flanagan

Outsourcing Averts Data Blowups

Critical functions like reference data management require outside expertise.

Outsourced service providers have emerged to provide buy- and sell-side firms with high quality data management services, freeing them to do the planning and overseeing that is required to build robust data management functions.

Sell-side firms are looking to jettison their high fixed-cost data infrastructure. “On the broker-dealer side, there’s a lot of cost pressure, and one way to take out costs is to have someone else manage their data activities,” Alberto Corvo, managing principal for financial services at eClerx, told Markets Media.

“From the buy side, there’s a lot of startup activity in hedge funds, and they see no point in having their own middle and back offices,” said Corvo.

The strict methodological approach to define the process workflows and to then deliver on them is a specialized task, well suited to established process-oriented service providers.

“Running rules-based processes with highly skilled, and in many cases lower cost resources, is the main business of outsourced service providers,” said Corvo, noting their experience in building extensive data architectures, robust and secure infrastructure, automation tools and process designs.

Propagating the ‘golden’ data source to downstream systems and data users demands both ‘push’ channels as well as interfacing with systems that need to ‘pull’ information on demand.

“All information disseminated must be available in any one of a multitude of formats, all interfaced through a variety of protocols,” said Corvo. “While all such wizardry must be applied and is important, what matters equally is the ease with which users can access the information anytime and anywhere.”

Reference data management, for example, requires multiple subsets each with its own requirements, such as product data, client data, pricing data and taxonomy data.

“Taxonomy data is critical to identifying counterparty exposure,” said Corvo. “Firm need to manage exposures with entities and sub-entities, and if you don’t have the taxonomy right, it creates a number of problems.”

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