While I’m sure hard-core Reference Data Review readers would agree wholeheartedly with us that the world of enterprise data management is always an exciting place to be, it has to be said that recent weeks have been particularly exciting, with the flurry of corporate activity we’ve seen.
The investment by Fidelity Ventures in Asset Control and its concurrent acquisition of TAP Solutions is arguably both an endorsement of the value of data management systems (Fidelity took the prudent step of sizing the market prior to its investment) and a precursor of further consolidation in the supplier space, a sure indicator of increasing maturity.
Meanwhile, confirmation that Interactive Data Corporation plans to acquire the market data business of Xcitek with a view to creating a global corporate actions data offering reinforces the trend we’ve already seen for the data vendors to build out their coverage to position as enterprise providers. Indeed, part of the vision of new Asset Control CEO, ex-Reuters man Phil Lynch, is to work with the data vendors to support their enterprise ambitions by helping to make it easier for firms to consume their data and thus in theory stimulate wider use of it.
These highlights aside, the pages that follow are crammed with stories indicating the growing use by financial institutions of solutions and services to streamline data manage-ment for efficiency, risk management or regulatory compliance purposes. Reducing manual data handling, working with third parties to meet the data obligations of MiFID to free up resource to focus on its strategic implications and encouraging data vendors to partner to provide richer data sets through unified channels are themes running throughout this issue of Reference Data Review.
Activity generated by the growing investment in complex structured products in particular continues to gather pace. Increasing regulatory scrutiny is driving a requirement for more frequent and more accurate valuation activity by investment firms and administrators alike, and this creates a major data challenge when it comes to hard to price assets. The market requires its data vendors to step up to the plate and source useful additional data to bolster their own evaluation efforts, and they are doing so. As crow-barring product structures into legacy systems becomes an ever-less viable option from an operational efficiency and risk perspective, so this is stimulating demand for data management layers with data models able to cope with new instrument types. Fidelity’s conviction that the data management systems business has real legs is in part based on its belief that firms need to re-engineer their infrastructures to cope with the need for speed and efficiency for commoditised business on the one hand, and the growing complexity of new instrument types on the other. Since today’s complex new structure will inevitably become tomorrow’s slightly more commoditised instrument, to be replaced by a hitherto unthought of variant, it is hard to see how the demand for both data and systems with the coverage and flexibility to support complex products can do anything but escalate significantly over the coming months and years.