Sharpen your edge
21 January 2020
Industry experts discuss why demands for real-time data will only continue to grow in 2020 and beyond as both borrowers and lenders seek a competitive advantage
Image: Shutterstock
The demand for near real-time data visibility on SBL transactions and portfolios was a major technology trend of 2019, how much of an advantage does having access to up-to-date data give you as a securities lending participant?
Laura Allen: Having access to up-to-date data allows for better decision-making. Firms that make evidenced-based decisions derived from data analysis, rather than based on human preferences, have a competitive advantage as it results in higher utilisation and profitability. Furthermore, access to data allows for the creation of smarter products, which automate manual processes and provide for artificial intelligence (AI) capabilities, freeing up traders to do more creative, complex and interpersonal tasks.
That being said, having access to the data is one thing, actually engaging with it requires several steps. The data needs cleaning, stripping and storing, the right technology is required to analyse the data, identify patterns and automate the decision-making processes and prediction and modelling tools are needed to determine how the tool should react based upon data changes.
Therefore, to truly benefit from up-to-date data each individual firm has to encourage the change, and needs to implement a strategy to become a data driven organisation. This requires creativity and a clear vision, defining how they want to do business, what people they need, what data to collect and what technology is required.
Michele Filippini: For many of our collateral providers in triparty, having real-time data available allows a more complete picture of the pre-trade decision making process. While previously the decision to borrow was a function of price, now the regulatory impacts of a pre-trade decision can alter the economics of the trade. Having complete real-time data that extends beyond the borrow fee to incorporate factors such as counterparty rating, trade term, the flexibility of the collateral set and the operational efficiency of the counterparty can all impact the pre-trade decision. Therefore, having these data points available at the point of execution is key.
Jennifer Hanes: The securities finance and collateral market is advancing in complexity faster than ever and, as a result, the need for real-time data has never been greater. It is no longer just about the latest and most up-to-date fee or rebate rates. Íø±¬³Ô¹Ï lending traders need real-time access to a range of information and performance statistics, from inventory to counterparty exposures and from balance sheet usage to portfolio performance. Fingertip access to this information allows them to leverage their assets to their full potential at a moment’s notice.
John Tootell: At Pirum, our clients have been utilising near real-time comparisons for more than 10 years. During 2019, we saw an increase in the number of real-time reconciliations by more than 50 percent, with increased interest in collateral, exposure management as well as settlement status with our customers getting ready for the impacts of the Central Íø±¬³Ô¹Ï Depositories Regulation (CSDR).
Enabling intraday feeds can give market participants access to powerful automation including automatic returns and mark to markets, both of which will help to reduce breaks and significantly reduce manual effort.
The more real-time the dataset, the higher the level of straight-through processing (STP) the client can expect – at Pirum we regularly see STP rates at the 99 percent level.
In addition, with the Íø±¬³Ô¹Ï Financing Transactions Regulation (SFTR) going live this year, having the ability to clear breaks on a T+0 basis is critical to ensure that match rates are as high as possible.
Paul Wilson: We have seen a dramatic increase in the number of contributors and recipients of intraday data during 2019, with that coming from both lender and borrower side of the market. We have seen several instances throughout the year, whether in initial public offering stocks or stocks moving quickly from general collateral to special, where the availability of intraday data allowed these participants to be more proactive in managing their inventory, loan positions and fee levels. In market conditions that are generally over supplied with a lack of demand, the ability to be in front of opportunities and developing market scenarios is an advantage.
What are the main drivers of intraday and real-time data demands? Is it new technology, regulation, or something else?
Filippini: The existence of new technologies including distributed ledger technology (DLT) allows the market as a whole to better explore avenues of efficiency in the traditional securities lending workflow. Regulatory changes are also driving this evolution, as they increase the cost of being inefficient for financial institutions.
Settlement efficiency, optimal asset allocation and mobilisation are crucial in ensuring post trade friction does not affect the ability of the front office to generate returns. Adopting new technology that reduces timing and increases the velocity of collateral mobilisation will create a more efficient collateral ecosystem.
Wilson: Creating out-performance for lenders or lowering financing costs for borrowers are increasingly dominant factors in the market as participants look to differentiate themselves. Investments in technology and regulation have dominated the environment over the past five years so on that front nothing has really changed. So what we hear from our clients the pursuit of alpha or cost savings are the primary driver of the demand for intraday data.
Tootell: Regulation has clearly been a significant driver towards real-time comparison. Needing to report trades on a T+1 basis for SFTR means that an overnight comparison process is no longer fit for purpose. Correspondingly in 2019, we have seen an increased demand in the fixed income repo/bond borrow space for real-time comparisons.
Regulation coupled with a drive for greater efficiency as a result of reducing revenues seem to be the main reasons for this shift in behaviour.
A further tail-wind for real-time has come through ease of integration, with Pirum working with other technology vendors to create standard integration interfaces and files, thus reducing the burden of standardisation to our clients.
Hanes: The need to be regulatory compliant, particularly given the impending impact of SFTR, is driving many organisations to upgrade their data management to meet the reporting demands being applied to them. The complexity of the regulation, demanding highly-granular reports in a tight timeframe leaves no option but to employ real-time or at least intraday data protocols simply to meet the deadlines set.
Modern technology enables market participants to gain a competitive edge, armed with data their competitors may not have. Intraday data has long been the market standard delivered by FIS in the US but is now gaining much wider acceptance elsewhere in the world, in part driven by regulation, but also the need to be increasingly competitive.
Allen: Regulation (specifically SFTR and CSDR) has been instrumental in providing accurate, consistent and timely data to the market and smarter products are being developed as a result of the increase in real-time data availability.
I don’t think technology is a driver for real-time data: it’s the facilitator. Providing software which is capable of machine learning increases the demand for a wider range of data points and more frequent updates and we are definitely experiencing this at Trading Apps. Traditional, on-site databases have proved cumbersome, expensive and limiting in the area. The continued introduction of cloud-based solutions and distributed architecture have improved scalability and performance.
The need to stay ahead of the competition in an increasingly competitive, low-margin market is more likely to be the driver. Our clients support this theory with their main motivation being price discovery and revenue optimisation.
2020 will usher in the settlement discipline rules under CSDR, which includes cash penalties and mandatory buy-in rules for fails. How much can timely data updates contribute to the solution to these new challenges?
Tootell: At Pirum we have been actively discussing challenges from CSDR with our clients for over a year and welcome those not engaged currently to contact us. We estimate that CSDR will cost our clients €300 million in fines and fails management costs – and using functionality available today will reduce this dramatically, whilst product enhancements we are working on will help improve this further and create additional efficiencies.
With the Pirum real-time pending screen, we can compare and display any breaking trade attributes that would affect settlement within seconds, and we have made enhancements to help firms prioritise CSDR impacted trades to reduce potential costs in the future.
When out seeing clients this year, we have been reiterating that Pirum isn’t a replacement for the data that you receive from your agent, but rather can complement it. Having Pirum in your toolkit will definitely provide benefits in ensuring that trades are pre-matched and penalties avoided.
Prevention of breaks is always better than cure, so it is always preferential to fix issues at their root cause – using our automation suite is a way to ensure that trades and returns are automatically booked correctly in the first place. Similarly using automation in the trading space should also ensure that trades are booked more accurately – ultimately though the real-time pending screen is there as your safety net.
Wilson: We think that more data points and more timely availability of a broad set of data points will generally assist in managing new challenges such as CSDR. At IHS Markit we make available to our clients reports which look at lending levels and liquidity levels across securities and make that relevant to each security a lender has on loan. This helps them better understand if liquidity levels are falling and making the likelihood of a failed re-call higher. By using data to understand changing circumstances allows our clients to get in front of issues before they arise.
Allen: The majority of traditional position management tools within securities finance assume good settlement, as often real time settlement and depot position feeds are not available. The drive for inventory optimisation results in operations having to call for more securities to cover failing purchases or increased collateral substitutions.
Operations within our industry has lacked investment in technology, CSDR requirements will challenge current practices. To be compliant firms will need to know projected and real-time depot positions and have these visible within the securities finance position management systems. Furthermore, firms will need automated processes to recall collateral and loans to make good settlement.
Hanes: In the age of instant access to real-time data across every aspect of our personal and professional lives, it would not appear surprising to any outside observers that trading on aged data creates unnecessary and unacceptable risks. FIS is working on several projects to bring real-time global position and inventory management to life to ensure that our client’s trading commitments are fulfilled and fails eradicated wherever possible.
Filippini: Providing access to real time reporting, whether it be on our portal or via report feeds, has the potential to significantly increase the settlement efficiency of securities loans. With the delivery of collateral being a precursor to loan release, faster collateral allocation and subsequent reporting will allow for a more efficient release and settlement of the underlying securities lending trade. This becomes even more critical in the no fails environment of CSDR.
As a financial institution or service provider, how important is real-time data to you and your clients?
Wilson: As already noted, we have seen a dramatic increase in the demand from our clients for intraday/near time data, so therefore this becomes an important part of our overall data strategy.
Allen: An ability to harvest real-time data is very important and forms the foundation of many of our initiatives. Furthermore we’ve seen a distinct change at some of our clients as they implement strategies to become data driven organisations. They have appointed people who value evidenced-based reasoning and can think creatively about how to use the data, what thresholds to set and what metrics to monitor in order to drive business outcomes.
Our clients are looking to make price-reactive decisions based on the quantity, repetitiveness of requests, the breadth and depth of the client base and how quickly trades are executed with a view to automatically moving rates as availability/demand shifts.
Furthermore, our clients are monitoring the profit-and-loss impact of lifecycle events, real time, allowing them to dynamically manage their securities financing revenue. They require real-time notification when the market appears to be changing and tools that allow them to react quickly to those changes.
Tootell: There are so many benefits of using real-time data in your workflow – as well as reducing the impact of CSDR and SFTR, clients general operational efficiency will increase and they will be able to improve risk management through real-time collateral and exposure management with counterparts.
Supporting processing on a real time basis is not new for Pirum and it has been around for almost 10 years. What is really encouraging is the take up and momentum of real time from our clients throughout 2019 within not only their securities lending business, but also now across their repo and over-the-counter derivatives ones.
Furthermore, in the collateral space our clients can now see all their exposures consolidated in one place using real-time data. In an environment of increasing demand within firms for collateral it is sub-optimal to have to wait to see the results of an action performed – be it triparty-required value posting, projections or even dispute resolution. Pirum can now reflect and process real-time collateral, as well as exposure management and dispute resolution.
With declining revenues and compressed margins, it is critical that operational cost is minimised and, in that regard, we take our job of automating the securities financing lifecycle very seriously. The good news is that this can largely be achieved by adopting our real-time collateral management and trade lifecycle products, minimising the time to achieve true real-time processing and the benefits this brings.
Hanes: With financial markets demanding ever faster, more secure and quicker settlements and payments, real-time data is proving vital across our entire client base. Real-time data is vital for FIS to manage our global payments services in support of more than 20,000 clients in 130 countries, including Worldpay from FIS, where we process more than 40 billion transactions each year. As a global provider in this space, we understand exactly how vital real-time data is to our securities finance clients in the management of their businesses.
Filippini: As a service provider, we have to be in a position to respond to our client’s needs to request data-driven changes to our platform. In the past year we have completed the digitisation of the collateral eligibility set workflow, allowing our clients to execute schedule changes intraday and near real time. Functionality like this is key to helping clients responding quickly to new trading strategies or in stress environments where eligibility changes need to be applied quickly to minimise risk.
Will demand for more timely data increase in 2020 and beyond? Do you expect it to become an industry-standard in the near future?
Hanes: The need for more better-quality data that is delivered faster and engineered to make a true impact will only get higher. As a provider of intraday data to the securities finance market for almost 15 years, I’d say that it is already an industry standard. Trading on data that is a day old simply isn’t acceptable any longer.
Filippini: We expect the demand and use cases for different types of data consumption to continue as clients need--and gain access to--more dynamic data. The use of APIs and the ability to consolidate data into a real time view are critically important to helping them make decisions in real time based on the clearer picture that data provides. A good example is our ongoing work to help clients achieve their optimisation objectives as it relates to efficient collateral allocation. Each institution will have a different approach to allocating collateral depending upon their regulatory binding constraints. The information we provide through digitised eligibility schedules, position information and exposure values gives clients the real-time data required to run their internal optimisers. Connecting their own optimisers to the algorithms within J.P. Morgan triparty presents an opportunity for our clients to maximise returns.
Allen I expect market participants demand for more timely data will continue in 2020 and beyond. It is encouraging that market participants are looking to make their workflows more efficient and are striving to implement rule-based automation. This is a solid foundation to then move towards AI and machine learning, once the appropriate technology is in place to identify patterns within the data, create algorithms and models for applications to call upon when decisions need to be made.
As an industry we share data on trades, lifecycle events and products and as a vendor, Trading Apps spends an inordinate amount of time cross-checking data sets and comparing terminology when looking to integrate with other systems. For our industry to truly move forward we need to adopt a common domain model to create a single definition of those things, thereby creating standardisation.
Tootell: I think the simple answer is yes. Firms that haven’t adopted real time will find it increasingly difficult to adhere to upcoming regulation requirements and are likely to see costs increase.
It seems the industry is in the midst of a paradigm shift and we are seeing significant change across most organisations. Many firms are transitioning from the planning stage to the execution stage. In doing so, institutions are data gathering to ensure they make the right informed choices. Pirum is looking to assist clients and the market in general, in effecting this change and transformation in global real-time operating models.
Wilson: The demand for more data, broader data, associated data and intra day data is only going to increase in 2020 and beyond. A good example is we very recently added high-quality liquid assets (HQLA) designations against every security in our dataset so our clients can see inventory, loan, fee and other data in the context of HQLA. This gets updated every day. We are the only securities finance data provider that provides this incredible important piece of data to its clients and allows our clients to better understand their books in the context of HQLA.
We are working on an exciting variety of similar types of additions to our dataset in 2020 that will allow our clients to be more proactive and precise in managing their books. As the industry evolves and adapts, and 2020 will be a challenging year with SFTR implementation, boundaries will be moved in terms of data and timely data.
Laura Allen: Having access to up-to-date data allows for better decision-making. Firms that make evidenced-based decisions derived from data analysis, rather than based on human preferences, have a competitive advantage as it results in higher utilisation and profitability. Furthermore, access to data allows for the creation of smarter products, which automate manual processes and provide for artificial intelligence (AI) capabilities, freeing up traders to do more creative, complex and interpersonal tasks.
That being said, having access to the data is one thing, actually engaging with it requires several steps. The data needs cleaning, stripping and storing, the right technology is required to analyse the data, identify patterns and automate the decision-making processes and prediction and modelling tools are needed to determine how the tool should react based upon data changes.
Therefore, to truly benefit from up-to-date data each individual firm has to encourage the change, and needs to implement a strategy to become a data driven organisation. This requires creativity and a clear vision, defining how they want to do business, what people they need, what data to collect and what technology is required.
Michele Filippini: For many of our collateral providers in triparty, having real-time data available allows a more complete picture of the pre-trade decision making process. While previously the decision to borrow was a function of price, now the regulatory impacts of a pre-trade decision can alter the economics of the trade. Having complete real-time data that extends beyond the borrow fee to incorporate factors such as counterparty rating, trade term, the flexibility of the collateral set and the operational efficiency of the counterparty can all impact the pre-trade decision. Therefore, having these data points available at the point of execution is key.
Jennifer Hanes: The securities finance and collateral market is advancing in complexity faster than ever and, as a result, the need for real-time data has never been greater. It is no longer just about the latest and most up-to-date fee or rebate rates. Íø±¬³Ô¹Ï lending traders need real-time access to a range of information and performance statistics, from inventory to counterparty exposures and from balance sheet usage to portfolio performance. Fingertip access to this information allows them to leverage their assets to their full potential at a moment’s notice.
John Tootell: At Pirum, our clients have been utilising near real-time comparisons for more than 10 years. During 2019, we saw an increase in the number of real-time reconciliations by more than 50 percent, with increased interest in collateral, exposure management as well as settlement status with our customers getting ready for the impacts of the Central Íø±¬³Ô¹Ï Depositories Regulation (CSDR).
Enabling intraday feeds can give market participants access to powerful automation including automatic returns and mark to markets, both of which will help to reduce breaks and significantly reduce manual effort.
The more real-time the dataset, the higher the level of straight-through processing (STP) the client can expect – at Pirum we regularly see STP rates at the 99 percent level.
In addition, with the Íø±¬³Ô¹Ï Financing Transactions Regulation (SFTR) going live this year, having the ability to clear breaks on a T+0 basis is critical to ensure that match rates are as high as possible.
Paul Wilson: We have seen a dramatic increase in the number of contributors and recipients of intraday data during 2019, with that coming from both lender and borrower side of the market. We have seen several instances throughout the year, whether in initial public offering stocks or stocks moving quickly from general collateral to special, where the availability of intraday data allowed these participants to be more proactive in managing their inventory, loan positions and fee levels. In market conditions that are generally over supplied with a lack of demand, the ability to be in front of opportunities and developing market scenarios is an advantage.
What are the main drivers of intraday and real-time data demands? Is it new technology, regulation, or something else?
Filippini: The existence of new technologies including distributed ledger technology (DLT) allows the market as a whole to better explore avenues of efficiency in the traditional securities lending workflow. Regulatory changes are also driving this evolution, as they increase the cost of being inefficient for financial institutions.
Settlement efficiency, optimal asset allocation and mobilisation are crucial in ensuring post trade friction does not affect the ability of the front office to generate returns. Adopting new technology that reduces timing and increases the velocity of collateral mobilisation will create a more efficient collateral ecosystem.
Wilson: Creating out-performance for lenders or lowering financing costs for borrowers are increasingly dominant factors in the market as participants look to differentiate themselves. Investments in technology and regulation have dominated the environment over the past five years so on that front nothing has really changed. So what we hear from our clients the pursuit of alpha or cost savings are the primary driver of the demand for intraday data.
Tootell: Regulation has clearly been a significant driver towards real-time comparison. Needing to report trades on a T+1 basis for SFTR means that an overnight comparison process is no longer fit for purpose. Correspondingly in 2019, we have seen an increased demand in the fixed income repo/bond borrow space for real-time comparisons.
Regulation coupled with a drive for greater efficiency as a result of reducing revenues seem to be the main reasons for this shift in behaviour.
A further tail-wind for real-time has come through ease of integration, with Pirum working with other technology vendors to create standard integration interfaces and files, thus reducing the burden of standardisation to our clients.
Hanes: The need to be regulatory compliant, particularly given the impending impact of SFTR, is driving many organisations to upgrade their data management to meet the reporting demands being applied to them. The complexity of the regulation, demanding highly-granular reports in a tight timeframe leaves no option but to employ real-time or at least intraday data protocols simply to meet the deadlines set.
Modern technology enables market participants to gain a competitive edge, armed with data their competitors may not have. Intraday data has long been the market standard delivered by FIS in the US but is now gaining much wider acceptance elsewhere in the world, in part driven by regulation, but also the need to be increasingly competitive.
Allen: Regulation (specifically SFTR and CSDR) has been instrumental in providing accurate, consistent and timely data to the market and smarter products are being developed as a result of the increase in real-time data availability.
I don’t think technology is a driver for real-time data: it’s the facilitator. Providing software which is capable of machine learning increases the demand for a wider range of data points and more frequent updates and we are definitely experiencing this at Trading Apps. Traditional, on-site databases have proved cumbersome, expensive and limiting in the area. The continued introduction of cloud-based solutions and distributed architecture have improved scalability and performance.
The need to stay ahead of the competition in an increasingly competitive, low-margin market is more likely to be the driver. Our clients support this theory with their main motivation being price discovery and revenue optimisation.
2020 will usher in the settlement discipline rules under CSDR, which includes cash penalties and mandatory buy-in rules for fails. How much can timely data updates contribute to the solution to these new challenges?
Tootell: At Pirum we have been actively discussing challenges from CSDR with our clients for over a year and welcome those not engaged currently to contact us. We estimate that CSDR will cost our clients €300 million in fines and fails management costs – and using functionality available today will reduce this dramatically, whilst product enhancements we are working on will help improve this further and create additional efficiencies.
With the Pirum real-time pending screen, we can compare and display any breaking trade attributes that would affect settlement within seconds, and we have made enhancements to help firms prioritise CSDR impacted trades to reduce potential costs in the future.
When out seeing clients this year, we have been reiterating that Pirum isn’t a replacement for the data that you receive from your agent, but rather can complement it. Having Pirum in your toolkit will definitely provide benefits in ensuring that trades are pre-matched and penalties avoided.
Prevention of breaks is always better than cure, so it is always preferential to fix issues at their root cause – using our automation suite is a way to ensure that trades and returns are automatically booked correctly in the first place. Similarly using automation in the trading space should also ensure that trades are booked more accurately – ultimately though the real-time pending screen is there as your safety net.
Wilson: We think that more data points and more timely availability of a broad set of data points will generally assist in managing new challenges such as CSDR. At IHS Markit we make available to our clients reports which look at lending levels and liquidity levels across securities and make that relevant to each security a lender has on loan. This helps them better understand if liquidity levels are falling and making the likelihood of a failed re-call higher. By using data to understand changing circumstances allows our clients to get in front of issues before they arise.
Allen: The majority of traditional position management tools within securities finance assume good settlement, as often real time settlement and depot position feeds are not available. The drive for inventory optimisation results in operations having to call for more securities to cover failing purchases or increased collateral substitutions.
Operations within our industry has lacked investment in technology, CSDR requirements will challenge current practices. To be compliant firms will need to know projected and real-time depot positions and have these visible within the securities finance position management systems. Furthermore, firms will need automated processes to recall collateral and loans to make good settlement.
Hanes: In the age of instant access to real-time data across every aspect of our personal and professional lives, it would not appear surprising to any outside observers that trading on aged data creates unnecessary and unacceptable risks. FIS is working on several projects to bring real-time global position and inventory management to life to ensure that our client’s trading commitments are fulfilled and fails eradicated wherever possible.
Filippini: Providing access to real time reporting, whether it be on our portal or via report feeds, has the potential to significantly increase the settlement efficiency of securities loans. With the delivery of collateral being a precursor to loan release, faster collateral allocation and subsequent reporting will allow for a more efficient release and settlement of the underlying securities lending trade. This becomes even more critical in the no fails environment of CSDR.
As a financial institution or service provider, how important is real-time data to you and your clients?
Wilson: As already noted, we have seen a dramatic increase in the demand from our clients for intraday/near time data, so therefore this becomes an important part of our overall data strategy.
Allen: An ability to harvest real-time data is very important and forms the foundation of many of our initiatives. Furthermore we’ve seen a distinct change at some of our clients as they implement strategies to become data driven organisations. They have appointed people who value evidenced-based reasoning and can think creatively about how to use the data, what thresholds to set and what metrics to monitor in order to drive business outcomes.
Our clients are looking to make price-reactive decisions based on the quantity, repetitiveness of requests, the breadth and depth of the client base and how quickly trades are executed with a view to automatically moving rates as availability/demand shifts.
Furthermore, our clients are monitoring the profit-and-loss impact of lifecycle events, real time, allowing them to dynamically manage their securities financing revenue. They require real-time notification when the market appears to be changing and tools that allow them to react quickly to those changes.
Tootell: There are so many benefits of using real-time data in your workflow – as well as reducing the impact of CSDR and SFTR, clients general operational efficiency will increase and they will be able to improve risk management through real-time collateral and exposure management with counterparts.
Supporting processing on a real time basis is not new for Pirum and it has been around for almost 10 years. What is really encouraging is the take up and momentum of real time from our clients throughout 2019 within not only their securities lending business, but also now across their repo and over-the-counter derivatives ones.
Furthermore, in the collateral space our clients can now see all their exposures consolidated in one place using real-time data. In an environment of increasing demand within firms for collateral it is sub-optimal to have to wait to see the results of an action performed – be it triparty-required value posting, projections or even dispute resolution. Pirum can now reflect and process real-time collateral, as well as exposure management and dispute resolution.
With declining revenues and compressed margins, it is critical that operational cost is minimised and, in that regard, we take our job of automating the securities financing lifecycle very seriously. The good news is that this can largely be achieved by adopting our real-time collateral management and trade lifecycle products, minimising the time to achieve true real-time processing and the benefits this brings.
Hanes: With financial markets demanding ever faster, more secure and quicker settlements and payments, real-time data is proving vital across our entire client base. Real-time data is vital for FIS to manage our global payments services in support of more than 20,000 clients in 130 countries, including Worldpay from FIS, where we process more than 40 billion transactions each year. As a global provider in this space, we understand exactly how vital real-time data is to our securities finance clients in the management of their businesses.
Filippini: As a service provider, we have to be in a position to respond to our client’s needs to request data-driven changes to our platform. In the past year we have completed the digitisation of the collateral eligibility set workflow, allowing our clients to execute schedule changes intraday and near real time. Functionality like this is key to helping clients responding quickly to new trading strategies or in stress environments where eligibility changes need to be applied quickly to minimise risk.
Will demand for more timely data increase in 2020 and beyond? Do you expect it to become an industry-standard in the near future?
Hanes: The need for more better-quality data that is delivered faster and engineered to make a true impact will only get higher. As a provider of intraday data to the securities finance market for almost 15 years, I’d say that it is already an industry standard. Trading on data that is a day old simply isn’t acceptable any longer.
Filippini: We expect the demand and use cases for different types of data consumption to continue as clients need--and gain access to--more dynamic data. The use of APIs and the ability to consolidate data into a real time view are critically important to helping them make decisions in real time based on the clearer picture that data provides. A good example is our ongoing work to help clients achieve their optimisation objectives as it relates to efficient collateral allocation. Each institution will have a different approach to allocating collateral depending upon their regulatory binding constraints. The information we provide through digitised eligibility schedules, position information and exposure values gives clients the real-time data required to run their internal optimisers. Connecting their own optimisers to the algorithms within J.P. Morgan triparty presents an opportunity for our clients to maximise returns.
Allen I expect market participants demand for more timely data will continue in 2020 and beyond. It is encouraging that market participants are looking to make their workflows more efficient and are striving to implement rule-based automation. This is a solid foundation to then move towards AI and machine learning, once the appropriate technology is in place to identify patterns within the data, create algorithms and models for applications to call upon when decisions need to be made.
As an industry we share data on trades, lifecycle events and products and as a vendor, Trading Apps spends an inordinate amount of time cross-checking data sets and comparing terminology when looking to integrate with other systems. For our industry to truly move forward we need to adopt a common domain model to create a single definition of those things, thereby creating standardisation.
Tootell: I think the simple answer is yes. Firms that haven’t adopted real time will find it increasingly difficult to adhere to upcoming regulation requirements and are likely to see costs increase.
It seems the industry is in the midst of a paradigm shift and we are seeing significant change across most organisations. Many firms are transitioning from the planning stage to the execution stage. In doing so, institutions are data gathering to ensure they make the right informed choices. Pirum is looking to assist clients and the market in general, in effecting this change and transformation in global real-time operating models.
Wilson: The demand for more data, broader data, associated data and intra day data is only going to increase in 2020 and beyond. A good example is we very recently added high-quality liquid assets (HQLA) designations against every security in our dataset so our clients can see inventory, loan, fee and other data in the context of HQLA. This gets updated every day. We are the only securities finance data provider that provides this incredible important piece of data to its clients and allows our clients to better understand their books in the context of HQLA.
We are working on an exciting variety of similar types of additions to our dataset in 2020 that will allow our clients to be more proactive and precise in managing their books. As the industry evolves and adapts, and 2020 will be a challenging year with SFTR implementation, boundaries will be moved in terms of data and timely data.
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