Imagine you’re a brokerage firm trading executive and the day’s biggest trade shows two conflicting SEDOL (stock exchange daily official list) identification numbers for the same security. Your automated systems have checked the data, each from different vendors. Finally, a staffer discovers that one of the SEDOLs shows the security priced in dollars, whereas the other is in Russian rubles.
To avoid such problems and to comply with such regulations as the European Union’s Markets in Financial Instruments Directive and the U.S.'s Sarbanes-Oxley Act of 2002, securities dealers need to ensure that their reference data -- the static information that describes a security -- is accurate. “It’s becoming more of a priority,” says John White, global manager of investment management services at Boston-based State Street Global Advisors.
Financial institutions spend $6 billion every year managing reference data, according to estimates by Bermuda-based technology consulting firm Accenture. Faced with slimmer margins, brokerages find such costs harder to swallow. “There just isn’t as much money in the business as there used to be,” notes William Cline, global managing partner for Accenture’s capital markets practice.
A new offering called Accenture Managed Reference Data Service aims to help banks and brokerages save on reference data management costs. Other vendors with reference-data-scrubbing products and services include Capital Markets Co., a multinational financial technology consulting firm with its global headquarters in Amsterdam, and New Yorkbased software firm GoldenSource, which provides a set of enterprise data management tools, including reference-data-cleansing software.
For MRDS, which signed Chicagobased hedge fund giant Citadel Investment Group as its first client in early September, Accenture will validate, process and provide the business rules for scrubbing data as part of a managed service. Asset Control, a data management systems vendor based in Chicago, will provide the software, and the service will run on Sun Microsystems’ Solaris 10 operating system, using the Santa Clara, California based computer company’s utility pricing model. Says Donna Rubin, senior director for financial services at Sun, “The more people who participate, the greater the economies of scale.”
