Why Data Management Is Central to Investment Management Success
Welcome back! If you've just joined us, we're in the middle of an initial series of blog posts designed to give our readers a bird's eye view of how technology is helping asset managers address today's operational issues.
Today's post echoes a theme highlighted in a brand new Institutional Investor Intelligence survey, which found that nearly two-thirds of investment managers looking to upgrade their systems in the next three years want to improve one aspect in particular: data management.
For asset managers, “data management" means three things. First, you need to gather data from what historically have been disparate systems – OMSs, accounting systems, risk systems, commission management systems, and so on. Second, you need to normalize the data – that is, to standardize it and make it easy to work with. And finally, you need to report that data to three very different constituencies:
Fund managers need to be able to pull together the large amount of data needed to fill out today's standard regulatory disclosure forms. In the United States, there's the SEC's Form PF and the CFTC's Form CPO-PQR; in Europe, there are the various transparency disclosures required by the European Union's Alternative Investment Fund Managers Directive, or AIFMD. In all cases, the challenge for asset managers is that the regulators require a truly varied dataset that cuts across several different areas – trading details, position exposures, risk parameters, and so on.
Investors need to be able to perform thorough operational and performance due diligence on a fund before they can even consider an allocation. In return, the fund they're analyzing needs to be able to give investors the data they need – quickly, and in a format that fits the investors' due diligence systems.
3. Internal users
The portfolio manager, the compliance officer, or the head of operations need to be able very quickly to pull together data from across all their portfolio strategies so they can review the whole picture from a variety of angles – their exposures, their P&L, their concentrations, their liquidity risk, where they're allocating their commission dollars, whatever it might be.
This used to involve a lot of hard manual labor, and not a lot of real-time results. But today's markets demand the technology that can manage data in real time. This means you can no longer rely on just moving files around; what's required are programmatic, API-driven techniques that are not only comprehensive and scalable, but also allow for real-time analysis and reporting. The next generation of web services will be using Internet languages like the RESTful API….
But that's a topic for a later date! Until next time, here's a little further reading on Eze's approach to data management, and be sure to subscribe to my blog below!