CIBC World Markets has secured the final leg of its data management platform for handling entity data. The firm – the capital markets arm of Canadian Imperial Bank of Commerce – is implementing GoldenSource’s Customers and Counterparties solution at its New York offices as the central data maintenance and storage application in support of the bank’s Know Your Client, Anti-Money Laundering and other regulatory compliance requirements.
CIBC World Markets recently selected both Cicada Cos. and its Counterparty Link (CPL) sibling data supplier to provide other key elements of the entity data solution (Reference Data Review, January 2005). Under the set-up, CPL will provide CIBC with its structured feed of entity data, covering 60+ data fields. The GoldenSource platform will handle standardized interface to that feed.
CIBC World Markets, meanwhile, has identified additional data fields it requires for its compliance responsibilities, and will use Cicada Cos. both to populate those fields and validate certain select fields within the CPL feed.
According to Paul Kennedy, vice president, product management at GoldenSource, the project is currently in implementation phase and is expected to go live over the next couple of months.
When complete, the platform will be used by CIBC World Markets to manage the creation of new accounts, research corporate background and due diligence checks, and capture and store legal agreements supporting customer relationships. As such, CIBC World Markets staff will be able to access counterparty information, such as PDF versions of legal agreements, in real time.
The platform will also help CIBC World Markets in its practice of assigning risk ratings to clients and their associated accounts. This function – used, for example, within the credit department of Deutsche Bank, again using Cicada to assist (Reference Data Review, September 2004) – represents a growing trend among institutions seeking to wring operational benefits from the raft of regulations they currently are required to comply with.
CIBC World Markets uses a proprietary risk algorithm to manage account documentation renewal. Based on this risk rating, the GoldenSource solution will automatically prioritize client accounts and the associated documentation and produce a daily list of accounts that need reassessment and document and compliance review.
Using the GoldenSource platform, CIBC World Markets will be able – through a series of linkages to multiple related master files – to access details of subsidiaries of any given entity, as well as securities issued by that subsidiary, the markets they were sold into and who currently holds them. In this way, the bank will acquire a comprehensive view of its exposure to any set of counterparties it deals with.
This kind of capability, Kennedy says, is particularly important in the burgeoning credit default swaps marketplace, where details of the so-called reference entity and related reference obligation are key to understanding value and risk. It remains a fact that despite new offerings from the likes of CPL, Deutsche Boerse’s Azdex, Dun & Bradstreet and pioneer Markit, with its Reference Entity Database (RED), there remains no universal standard for entity data, although Kennedy believes the ongoing wranglings ahead of the Markets in Financial Instruments Directive (MiFID) is pushing the marketplace toward a solution (for more details, see A-Team’s MiFID Monitor, due for publication later this month).
Indeed, this situation is pushing institutions to design their own solutions, resulting in multi-vendor implementations such as CIBC’s, Deutsche Bank’s and J.P. Morgan Chase’s (Reference Data Review, November 2005).
The CIBC implementation appears to have been the catalyst for Cicada to add new functionality within its Reference Data Management Suite aimed at meeting KYC and the U.S. Patriot Act requirements. Dubbed Profiler, the offering manages customer identification, account opening, review and verification.
As at CIBC, the stress is more on managing compliance requirements around customer data due diligence than on simply creating a consolidated repository. The company has said that regulatory complexities require an approach to managing customer data that goes beyond the creation of a centralized database alone.
Profiler’s features a set of configurable rules that ensure that customer record documentation has been validated, using a step-by-step approvals process. It also provides tools for AML risk-based customer profiling, which in turn helps automate the customer review and escalation process. The software also offers cross-referencing functionality and a document attachment facility for integrating customer record information.
As part of the CIBC project, Cicada also became the first adopter of the recently upgraded version of CPL’s legal entity data feed. Version 1.2 of the feed adds more comprehensive and detailed listing, registration and regulator information and the inclusion of additional industry-standard identifiers.
CPL sources the data from collection centres around the world, with all data collection and intervention supported by an audit trail to aid in meeting compliance requirements. Issuer and hierarchy data, as well as the related linkages needed to integrate with other data sources, are monitored continuously for corporate actions and other changes that affect the data.
The types of entities covered include corporations, funds and fund managers, financial institutions, governments, and most other common entities and their immediate, intermediate, and ultimate parents. Data is available through a subscription-based license, driven by user-defined interest lists, and is delivered to customers on a daily basis, in a choice of file formats including XML and CSV (comma-delimited) files.