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Data Rationale Needed as Exotic Instruments Mature, JPM’s Serentia Tells FIMA 2008

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Not all data should be centralised and there has to be a rationale for the data that you do centralise, said Peter Serenita, chief data officer of JPMorgan Worldwide Securities Services in a FIMA panel about ‘Ensuring a successful group-wide data management model’.

“Exotic instruments are not commoditisable, but you need to have a data model in place in order to handle them as they mature,” said Serenita. He pointed out that 15 years ago interest rate swaps were considered complex and now they are more run of the mill compared to the more exotic instruments being created.

Liam Davis, vice president of global data management strategy at Northern Trust, said, “We’re in a servicing business. But with the enterprise-wide data model we’re trying to get all information into a very narrow pipe.” He said Northern Trust is working with a local franchise model to address the needs of various clients in acknowledgement that one size does not fit all.

The panel agreed that trying to impose too many standards on instruments can have the negative impact of restricting innovation.

On the topic of outsourcing of data management from the securities services side, Liam said, “The goal of outsourcing is not typically to outsource data management, but to outsource areas such as fund servicing or operations and outsourcing data management is a consequence of that.

“We have felt the pain of outsourcing when the front office no long has any control over the data. But you have to overcome this with compromise and control. They come to the table with specific requirements now, which is a challenge as you end up in an environment with more than one boss.”

While outsourcing is usually a ‘cost reduction’ play, according to Serenita, it was pointed out that some firms have ended up paying more to manage their outsourcing than they were spending internally.

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