I attended the Financial Information Summit event on Tuesday, organized in Paris by Inside Market Data and Inside Reference Data.
Unsurprisingly, most of the topics discussed during the panels focused on reducing data costs, managing the vendor relationship strategically, LEI and building sound data management strategies.
Here is a (very) brief summary of the key points touched which generated a good debate from both panellists and audience:
Lowering data costs and cost containment panels
- Make end-users aware of how much they pay for that data so that they will have a different perspective when deciding if the data is really needed or a "nice to have"
- Build a strong relationship with the data vendor: you work for the same aim and share the same industry issues
- Evaluate niche data providers who are often more flexible and willing to assist while still providing high quality data
- Strategic vendor management is needed within financial institutions: this should be an on-going process aimed to improve contract mgmt for data licenses
- A centralized data management strategy and consolidation of processes and data feeds allow cost containment (something that Xenomorph have long been advocating)
- Accuracy and timeliness of data is essential: make sure your vendor understands your needs
- Negotiate redistribution costs to downstream systems
One good point was made by David Berry, IPUG-Cossiom, on the acquisition of data management software vendors by the same data providers (referring to the Markit-Cadis and PolarLake-Bloomberg deals) and stating that it will be tricky to see how the two business units will be managed "separately" (if kept separated…I know what you are thinking!).
There were also interesting case studies and examples supporting the points above. Many panellists pointed out how difficult can be to obtain high quality data from vendors and that only regulation can actually improve the standards. Despite the concerns, I must recognize that many firms are now pro-actively approaching the issue and trying to deal with the problem in a strategic manner. For example, Hand Henrik Hovmand, Market Data Manager, Danske Bank, explained how Danske Bank are in the process of adopting a strategic vendor system made of 4 steps: assessing vendor, classifying vendor, deciding what to do with the vendor and creating a business plan. Vendors are classified as strategic, tactical, legacy or emerging. Based on this classification, then the "bad" vendors are evaluated to verify if they are enhancing data quality. This vendor landscape is used both internally and externally during negotiation and Hovmand was confident it will help Danske Bank to contain costs and get more for the same price.
I also enjoyed the panel on Building a sound management strategy where Alain Robert- Dauton, Sycomore Asset Management, was speaking. He highlighted how asset managers, in particular smaller firms, are now feeling the pressure of regulators but at the same time are less prepared to deal with compliance than larger investment banks. He recognized that asset managers need to invest in a sound risk data management strategy and supporting technology, with regulators demanding more details, reports and high quality data.
For a summary on what was said on LEI, then seems like most financial institutions are still unprepared on how it should be implemented, due to uncertainty around it but I refer you to an article from Nicholas Hamilton in Inside Reference Data for a clear picture of what was discussed during the panel.
Looking forward, the panellists agreed that the main challenge is and will be managing the increasing volume of data. Though, as Tom Dalglish affirmed, the market is still not ready for the cloud, given than not much has been done in terms of legislation. Watch out!
The full agenda of the event is available here.