The problems with standardising data in the securities industry are well documented and have caused
the creation of umpteen global committees, spending countless hours, in a so far, fruitless crusade. With the industry in
general agreement that standardising data will bring about operational efficiencies, cost reductions and gain improved data
quality, it has been one of life’s mysteries why no solution has been forthcoming. Indeed despite a unity of purpose
there appears no clear direction or business case that compels a solution. So it is of extreme importance when Reuters one
of the giants of data distribution enters a new system into the scenario, which has real possibilities of shifting the industry
out of its syndrome of inertia. Reuters’
new EDM (Enterprise Data Management) system has the possibility of accelerating data efficiencies and moves the industry a
quantum leap forward. EDM should not only be welcomed by the market but also the data vendors as providing the potential to
reduce their cost overheads.
At first glance the thought of competing data vendors adopting the Reuters data standard appears
very unlikely. However, if the data industry can standardise their data receipt and distribution capability and gain a high
degree of straight through processing and reduce their overheads, with the resulting cost savings, it may not be too far fetched.
Adopting EDM would allow the data vendors to become commercially competitive and their market users should receive the benefits
of price reductions and as important operational efficiency. But will other data vendors play ball with Reuters to gain the
bigger picture rewards?
The answer is probably no, but if they would be a tad more adventurous, it should really be a yes.
Meanwhile the industry is very likely to continue on its fruitless crusade for many years, while the markets absorb costs
that have no reason to be there. It is only a matter of time before a new company offering data standards emerges to solve
the problem and will threaten the current data supply chain structure.
The development of XML as some part of the anticipated solution is possible and this concept is
growing across the industry. Soon all the moons will be in line and an XML based data solution will emerge. This type of solution
could be implemented from the issuers and made available directly to the market and could disenfranchise the existing data
vendors. It is therefore in the hands of the current data vendors to pursue a solution that provides all the ticks the market
is looking for and maintains the present structure of today’s data supply chain.
Gary Barr, the Global head of Enterprise Data Management at Reuters describes the data industry
as lacking the standards necessary to achieve the requirements that users desperately need, whether it is to comply with the
regulatory necessities of MiFID or with the increasing investors’ business requirements. He says that EDM can supply
a realistic systems solution that consolidates data and distributes it into any electronic format the users request, including
SWIFT messages, ISO15022, XML and of course
Reuters’ own proprietary format. Gary Barr makes the valuable statement that eventually EDM will be in open source and
it is this development which will set Reuters apart as a potential provider of the ultimate solution. EDM gathers disparate
data from multiple sources and the fields can be selected specifically by the user. This clearly offers the user a chance
to consolidate data and rationalise to their own requirements. Gary estimates that they already have over 600 software vendors
embedding RMDS into their software,
and accordingly will want to embed the new broadened EDM suite into their software to obtain the resultant standardisation benefits.
They have already contracted clients to use the system and this is a fine start to achieving what must be a first objective
of volume.
All this looks extremely promising in moving the industry out of its current stalemate but it could
be advanced further if EDM could be introduced to the issuers as a solution to their own data needs under the European transparency
directive. It is certainly not the focus of Reuters today but could this be a later move for EDM to solve the markets problems
at source?
Organising data at the market level is one thing but organising and structuring data at the primary
mark is quite another! It’s always been a bone of contention on how to incentivize the issuer to adopt market standards
and invest in the necessary systems. Sangreal Data was a new company established to produce a solution that combined the needs
of the issuer with the desires of the market and did not destabilise the data supply chain, but it foundered on lack of investment,
even though the end solution ticked all the boxes. Reuters does not have a lack of investment and has the necessary corporate
weight to carry through an ambitious project and in EDM a potential systems solution.
Could Reuters convince the market and the Issuers to go with them? The Issuers would be the hardest
nut to crack but Sangreal Data at least proved the viability of the offering, however, the changing regulatory requirements
for the issuer may open the door further. Could Reuters and EDM walk through or are they even willing to walk up to the door,
only time will tell. If Reuters are prepared to become even more ambitious in this industry and achieve greater results they
may need to explore further and expand EDM into the Issuers domain.
By Gary Wright
