Underscoring A-Team Consulting’s own research in this area, Tabb Group’s new report on the future of trading-related technology, points to reference data’s critical role in achieving the much-vaunted goal of straight-through-processing. Tabb describes external STP as “moribund” post September 11 and the demise of the GSTPA. However, the report – published last month and entitled Trading on the Future: A Brief Look at the Future of Financial Markets Technology – says internal STP is alive and flourishing, and dependent on reference data for its success.
Tabb warns that “many firms … prefer to be trading masters rather than data aggregators. They want to concentrate on making markets and executing customer trades, and not on the data. Thus they risk not having their house in order, mispricing trades and misanalyzing risk.” In its own research in this area – Securities Administration Data: The Essential Piece of the STP Puzzle – A-Team Consulting sited a Capco study that identified the lack of a reference data strategy as the primary cause of failed trades, which currently run at around 25% of all transactions.