J&J Bows Managed Data Reporting, Compliance Tool

The firm rolled out a pilot phase of the service late last year with two unnamed clients, and has since added two more clients. Tom Etheridge, managing director of market data at Jordan & Jordan, says the four clients include global investment banks, hedge funds, and technology vendors that provide data as part of their solutions and hence are subject to reporting requirements.

MDR automates the process of creating and submitting more than 20 report types required by exchanges, vendors and end-user firms, focusing on those that generate usage information to reconcile invoices for variable, usage-based fees and to support data auditing─though Etheridge says J&J can easily create new report types in response to client demand. These reports could cover exchanges that require users and vendors to report usage directly, proprietary reports required by vendors to monitor usage and entitlements, as well as optional reports for end-user firms that clients can use to identify discrepancies or changes in their data usage and spend from one month to the next, to spot cost-saving opportunities.

Etheridge says the novel aspect of MDR is the application of technology to automate the reporting processes. "We built a highly automated tool because we didn't want to have to ramp up staff and costs to support more clients," he says, adding that while some compliance requirements still specify a manual sign-off, greater automation also generally minimizes human error, and that making the process "documented and repeatable" will help ensure consistency, accuracy and compliance. "At some banks, the reporting process is run by people with a deep understanding of the inventory within their data, and in many cases, processes are not documented because the firm relies on that expert knowledge. The problem is that no matter how good an expert is, manual, undocumented processes lead to subtle variations, which can lead to errors."

In addition to the compliance aspects of MDR, the platform also helps users optimize savings such as MISU (multiple instance-single usage) reporting for exchanges that support it, as well as direct reporting that can yield exemptions from certain fees, and roles-based exemptions that might qualify users for fee waivers depending on whether their specific role is fee-liable or not.

Clients access MDR by logging in to a sub-portal of J&J's website, where they can view a calendar of upcoming and completed reports to be approved, and can examine each report in detail before approving and submitting them to the relevant exchange or vendor. Clients can also use this dashboard to track results of savings efforts, manage business rules, and add new reports. The platform also includes a full audit trail of who accessed and approved each item, and retains a history of reports for as long as specified by each client.

The front-end interface is fully web-based, and the back-end processing engine is hosted in two datacenters for redundancy─one in Virginia, and one in Oregon─with client data replicated and backed up every night. MDR obtains data from clients' systems─such as inventory data, and files that map user IDs to cost codes that describe individual users' roles, to take advantage of any roles-based exemptions─via secure FTP download, and can accept files in formats provided by inventory management system vendors or spreadsheets.

In addition to automating the upload of different file types and proprietary formats, MDR also creates outgoing files for submission in the exchange or vendor's own format, says Shlok Rastogi, director of market data services at J&J.

Etheridge declines to specify fees for MDR, but says J&J will charge a minimum service tier, after which the cost will be calculated based on variables such as the number of accounts being managed, and other metrics that determine the size of implementation required.