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FAME's View on Market Data Management and Investment Banking

Market data management has increasingly become a tactical concern for many investment management institutions over the last few years. It is now almost one of the key initiatives that are still drawing budget approval from cost conscious management.

The area of market data management focuses on two key concerns; the first is cost containment, the second is straight through processing (STP).

Enterprise data management has the benefit of reducing the number of systems that depend on direct data vendor feeds, this in turn can result in a significant saving in fees.

There has been a clear signal to all data vendors that firms are now moving to consolidate their sources of external data, preferably with enterprise initiated data management solutions, where cost savings is the major business driver. The ability to collect all externally supplied market data currently supplied by a number of data vendors into one central repository for further distribution internally is an ambitious project. The dependencies on efficient enterprise software and adherence to data representation standards is essential.

The STP burden is falling onto the shoulders of many buy side firms as increasing pressure from traded volumes is driving the market to progress further in the areas of trade settlement. The key to efficient STP is control over the quality of data used within the trade lifecycle. Analysis of the problems of trade failure are magnified by errors in market data.

The focus on timely and accurate market data is key to the successful implementation of a STP strategy within any firm, making the overall need for an enterprise market data management system paramount.

The data management challenge is complex as the volume of data to be managed and the complexity of traded instruments increases. The collection of data from multiple vendors for comparison purposes is seen as a key solution to making this a manageable task; however, the ability to decipher different semantics and delivery formats can be troublesome. The standard representation of data and efficient data processing capabilities are again essential for any sofware system to meet this challenge.

FAME's solution (REFERENCEPOINT) to the problems of data normalization and validation is the deployment of a security master with a generic financial relational data model. The security master database is the custodian of the 'golden copy', the composite of all data vendor data deemed by the firm to be the data of the highest quality. This provides a consistent data flow from external vendors to internal business systems.

The consolidation, management and integration via a comprehensive security master is the eventual goal of any enterprise data management solution and hence the natural claim of any data management software solution.

The generic nature of the financial data model is key to the success of the security master; however, just as important, if not more so, is the software that manages the security master. It is the data management software solution that most firms underestimate in terms of sophistication and often the reason why many internally developed solutions are so expensive and delayed in being deployed. FAME's management software (REFERENCEPOINT), fulfill's a number of key requirements.

These functional requirements call on the software designer and developer to have a real understanding of the market data that will pass through this system, bearing in mind that system failure can be devastating given the mission critical status of any market data being not available or in error.

Increasingly, as firms have deployed relational data bases to solve market data issues it has become apparent that no single system is a complete solution and that over time a number of security master databases start to coexist. This clearly defeats the objective of any enterprise system but seems to be unavoidable given that number and type of business systems that depend on market data. This has resulted in firms now stating that to solve their market data management issues they are not interested in 'building another database', as this will become just another database system to support and maintain.

The dilemma that software and data vendors now face is how to provide a coherent solution that integrates existing database systems within any firm together with the validation and correction of bad market data for STP without the creation of another database system.

The solution that vendors are now providing is 'intelligent integration layers' together with traditional database solutions. That is connectivity tools that enable any business system that need cleansed data to do so by combining data from separate database systems which has been pre-validated and simply needs to be retrieved at interfaced to the business system.

The market data management arena has now become a very competitive space and any competent solutions must embrace the issues of real experience and understanding of market data together with traditional database technology and sophisticated middleware layers to provide a complete solution.

FAME Information Services, Inc.
888 Seventh Avenue, 12th Floor
New York, New York 10106
Phone: 212.506.0300

Contact: Saad Rashid
E-mail: [email protected]


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