OTC derivatives are shaking up data management processes in financial services firms, according to an international survey by A-Team Group.
The research, commissioned by GoldenSource Corporation, studied trends in the management of instrument data and found that almost three quarters of respondents had, or were planning, to re-evaluate their data management processes because of the growing use of OTC derivatives.
Eighty-five percent of the respondents cited derivatives/options when asked to identify the top five most difficult data types to source and manage. Structured products, including mortgage-backed securities, collaterised mortgage obligations, loan-level detail for structured products, and collateralized debt obligations (CDOs) for U.S. and European Markets, followed with 45 percent of the votes.
One senior data manager suggested that 50 percent of the firm’s manual data effort went into sourcing and resolving issues in OTC products.
Similarly, a respondent from a large US broker/dealer commented: “We have quality data — no question. But, it is the last 1 to 2 percent that drains our resources. Of that small percentage, new OTC instruments need a lot of the focus.”