Asset Control-Sponsored White Paper Highlights Buy-Side Challenges and Data Management Impact

29 January 2009

Asset Control, a world-wide leader in financial data management solutions, has released a new white paper completed by London-based Lepus management consultancy, on the changing buy-side landscape and impact on data management practices as a result of the current financial crisis and other significant industry changes over the past several years.

Entitled “Establishing Control: Buy-Side Data Management in a Changing Landscape” and derived from Lepus’ industry search studies on the subject, the paper highlights several key trends and data management obstacles as they relate to price transparency, volume growth, expansion of asset coverage, and the post-MiFID world:

• Ultimately, managing price data is a universal challenge facing buy-side institutions holding OTC derivatives. Until a sufficient source of pricing and valuation is established, data collection, especially for complex instruments, remains largely manual and time consuming. Standardized, integrated and quality-controlled data is needed to create a clean set of prices for daily mark-to-market and risk management.

• The sheer weight of data generated by increased volumes, with spectacular growth from OTC derivatives, has been difficult to manage in a structured and effective manner. Data availability and consistency using a centralized approach is crucial to handling volume growth.

• Buy-side investments are becoming more diverse with the adoption of multi-asset trading strategies including alternative investments. Fragmented front-to-back office processes, disparate spreadsheets and application-based reference data silos can lead to increased errors and maintenance issues.

• The introduction of MiFID has increased the volume of price and trade data firms need to manage and has made it more challenging for buy-side firms to locate available liquidity and gauge its depth. Fragmentation of dark pools of liquidity and sources of data as well as an increasingly complex post-trade environment have accentuated the need for reliable access to consistent and complete data, while the cost of data rises due to buy-backs.

Phil Lynch, Asset Control’s president and chief executive officer, said, “The unprecedented volumes of data flowing throughout the financial services industry are forcing both buy-side and sell-side firms to take a closer look at the viability of their existing data management infrastructures and practices. In this climate of change, it is imperative that buy-side firms have access to consistent and complete information by eliminating reliance on data silos, as the cost of not doing will be measured not only in terms of lost revenue, but in mere survival of organizations.”

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