Reuters confirmed its ambitions to play a major role in global STP with the launch today of Reference Data Manager, an ASP service designed to help fund managers, broker-dealers and custodians obtain and use reference data – a generic term for standard settlement instructions (SSIs), corporate action information, and counter-party and asset identifiers such as BIC codes and ISINs – scattered not only throughout their own systems but a variety of third party providers as well.
The new service is the first fruits of Synetix, the joint venture between Reuters and Capco announced in October 2001. That month Reuters published jointly with CapCo (and its subsidiary, Tower Group) a survey of 131 financial institutions in Europe and North America – Reference Data: The Key to Quality STP and T + 1 – which found that three out of four respondents considered inadequate or incomplete reference data a major cause of trade failure. In fact, the survey estimated that one in three trades fail due to incomplete or inaccurate reference data. Two thirds of the survey respondents considered their data sources worryingly inaccurate. Only 4 per cent of data records were updated automatically. Half the firms surveyed were using at least ten different data sources and one in twelve – presumably the largest firms – over 150. Yet the survey also found that 37 per cent of financial institutions did not have a reference data strategy despite the impact of poorly managed data on their business. “These findings,” says Reuters, “emphasise the critical role data management has to play in addressing the growing need to reduce risk, particularly in the current economic uncertainty and with the SIA June 2005 deadline to achieve T+1.”
Reuters Reference Data Manager is designed to help firms improve the consistency of their reference data by analysing data held across different and geographically dispersed business systems and translating it into a common format. This will create a single view of the reference data used by the organisation, enabling it to identify and amend inaccurate or incomplete items.
The new service combines Reuters expertise in defining, managing and delivering data around the globe with Capco’s expertise in developing STP solutions. It forms part of Reuters Data Management Solutions, designed to assist financial institutions by ensuring their data meets the requirements of STP and delivers cost and operational efficiencies. Reuters suite of services include DataScope, a comprehensive and rigorously updated source of reference data, and access to Reuters Consulting’s data experts who specialise in helping institutions develop data management strategies and provide expertise on defining data and integrating applications.
Mark Sievewright, President & CEO of TowerGroup, says: “Data management is an issue that is gaining more and more importance in the industry due to the business requirement for true STP. It is something that affects all areas of the securities and investment sector, from how financial institutions manage their customers to how they manage their risk exposure. By failing to implement a clear data strategy, institutions are wide open to failed trades, undue risk, and the associated cost and inefficiency.”
Cormac Kelly, Chief Executive Officer of Synetix, comments: “The recent research conducted by Reuters, Capco and TowerGroup confirmed that financial institutions consider reliable reference data as a key to achieving STP. Poor data management is costly to the financial services industry as a whole so it is now time to focus on the standardisation and accuracy of reference data. Moreover, participants need to ensure the consistency of that data across their organisations, and throughout the lifecycle of their transactions. Reuters Reference Data Manager, powered by Capco will enable financial institutions to achieve an enterprise-wide view of their reference data, and facilitate an automated process to vastly improve data quality and consistency. This is the first in a range of services Reuters will deliver through Synetix, allowing clients to unlock efficiencies and achieve superior levels of real STP.”
Anthony Kirby, the recently appointed Reuters Group Marketing Director responsible for STP, adds: ” Financial services institutions are becoming increasingly aware that inconsistent and inefficient data increases operational risk and costs, hinders service delivery and results in missed sales opportunities. Add to this the industry’s focus on shorter settlement cycles, improving customer service, and meeting regulatory requirements and a sound information management strategy becomes critical to corporate success. Reuters is a world leader in the management and delivery of information and we are committed to developing solutions which help our customers reap the benefits of increased automation and avoid the costs associated with failed trades.
For Kirby, the new service will in a sense continue work he began four years ago as executive director of GSTPA, whose initial design included a plan to centralise reference data, until it ran into the concerted opposition of existing data sources (and notably Thomson ESG, now part of the Omgeo virtual matching utility with the DTCC). Hence the willingness of Reuters to work with existing data suppliers and other vendors operating in the global STP and reference data space. The joint venture with CapCo is merely the first of many Kirby intends to form with independent suppliers of information, software applications and other operational tools.