Release of new derivatives reference data workflow whitepaper

London, 10th December 2020

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, which was commissioned by Euromoney TRADEDATA, 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 go to https://info.euromoneytradedata.com/Acuiti20report

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