Mid-sized banks face multiple challenges of increased reporting requirements and higher volumes, putting a strain on derivatives reference data infrastructure
London — 10 December
More than half of tier 2 & 3 banks have an inefficient derivatives reference data workflow, a study by Acuiti, commissioned by Euromoney TRADEDATA, has found.
The study, which is released today in a whitepaper entitled Increasing Efficiency in Sell-side Reference Data Management, found that 53% of respondents from mid-sized banks reported their derivatives reference data workflows to be inefficient. This compared with 19% of tier 1 banks and 29% of smaller sell-side entities.
The major reference data challenges for sell-side firms, according to the study, were found in data feeds across internal systems, access to external data and the aggregation of data across the organisation.
Commenting on the study. Will Mitting, Founder and Managing Director of Acuiti, said: “Tier 2 and 3 banks represent the squeezed middle with regards to reference data workflows, facing the same reporting and volume requirements as their Tier 1 peers but without the investment budgets to create a more efficient workflow.
“Reference data taxonomy is fragmented across the industry, which is creating major headaches for the sell-side as they comply with significant increases in reporting mandates, which often bring in new taxonomies to add to the fragmentation.
“Traditionally the main option for the sell-side has been to invest heavily in human capital, often in offshore hubs, to decrease the operational burden of inaccurate or inefficient data. However, increasingly, more cost effective and less arduous tools are coming to the market to solve specific challenges.”
Commenting on the study, Mark Woolfenden, Managing Director of Euromoney TRADEDATA, said: ”The insights highlighted by the Acuiti report on new aspects of reference data issues, will help us target specific solutions for clients across the tiers but has alarmingly, also revealed the threshold sensitivity of tier 2 firms between success and failure, in having to balance the high burden of participant costs with lower scale trading in more specialist markets or niche products.”
The Acuiti report surveyed senior executives managing reference data across the sell-side. It seeks to identify the major challenges firms face in processing reference data and explore which data initiatives have the biggest impact on the efficiency of data workflows.
Other core findings in the report were:
- Using a “golden source” of data across the front, middle and back office had the biggest impact on the efficiency of data workflow, significantly more than how data was processed and structured across an organisation
- 49% of respondents reported that data errors frequently cause mismatched trades within their organisation
- 79% of respondents said that data fragmentation in their organisation made integration of new applications a challenge
- 27% of respondents used Robotic Process Automation or Chatbots in their post-trade operations
The study analyses how reference data is currently sourced, processed and managed across sell-side organisations and looks at the impact each model has on the efficiency of reference data workflow.
To download the whitepaper, click here.
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For more information, contact Will Mitting
Tel.: +44 (0) 203 998 9190
Email: willmitting@acuiti.io
About Acuiti
Acuiti is a management intelligence platform designed to provide Senior Industry Professionals in the Derivatives Industry with high-value insight into industry-wide performance and business operations. At Acuiti, we believe in quality, not quantity. We provide a platform through which our exclusive network of Senior Industry Executives can share and source information on day-to-day operational challenges, providing them and their management teams with increased transparency and in-depth analysis to make more informed decisions and benchmark company performance. Financial Institutions benefiting from our services include Banks, Non-bank FCMs, Brokers, Proprietary Trading Firms, Hedge Funds and Asset Managers.
About Euromoney TRADEDATA
Euromoney TRADEDATA provides an aggregation service for the global exchange traded derivatives. Recognised as the specialists and innovators in the futures and options market, we are now aiming to become innovators in other asset markets. The up-to-date market data we provide is essential for accurate and timely settlement of trades without the additional overheads of collating, validating and maintaining in-house data. We pride ourselves in being able to offer highly customised data feeds to integrate with any client application whether proprietary or vendor based. We supply instrument data for over 85,000 contracts on over 100 exchanges and are the reference data solution of choice for the world’s top tier financial organisations, exchanges and regulators.
For more information about Euromoney TRADEDATA and our solutions visit: www.euromoneytradedata.com
