Why Collaboration Is Key

Back in October, I noted that centralization in data management was emerging as a growing trend in our coverage. In November, I identified dichotomies or gaps in data governance, entity identifiers and pricing as a theme. Looking at the stories in the December issue of Inside Reference Data, the thread that appears in regard to how data professionals are addressing these and other issues is that nothing should be done in isolation, or can be done well that way.

Starting with the subject of transparency in pricing, Nicholas Hamilton observes that the days of supplying a price as an isolated data point are over. Wells Fargo's Daniel Johnson tells him that once pricing methodologies are set, sophisticated and large firms want to benchmark data against that supplied from the market. They know that taking data from an isolated, single source is insufficient-at least if you're trying to claim that the data you're getting or using is of the highest quality and accuracy.

Even where valuations are independent, in the case of alternative investment funds that will be subject to the Alternative Investment Fund Managers Directive, an external valuation is required to make sure those valuations are justified. In this story, Johnson also tells how some are reluctant to act as external valuers, fearing liability, and that if no-one does, that valuation comes only from the fund manager. This produces a valuation determined in isolation, which may prove unhealthy for these funds and the industry.

In Asia-Pacific markets, data professionals appear to be further along when it comes to collaborating on data management, as Max Bowie, editor of sister publication Inside Market Data, reports. Although that hasn't happened in a vacuum-the regulatory pressures there have pushed end-user firms to work closer with their data suppliers, ANZ's Mark Bands said during the Asia-Pacific Financial Information Conference which we co-sponsor with SIIA/FISD.

Still, battles abound closer to our home bases of New York and London in data governance, identifiers, and yes, of course, Fatca, the US foreign accounts tax law that has been getting more attention of late. If new regulation serves as a nudge in the right direction in other regions of the world, it appears to function as a more powerful dictate in North America and Europe, as participants in a data governance webcast said. All the same, London-based Northern Trust executive Les Beale noted that buy-in and cooperation is necessary for data governance programs to succeed. If there are separate programs, their common aspects should be found, he stressed.

And as seen in Fatca compliance efforts and legal entity identification standards planning, there are plenty of interested parties involved and working on both of these efforts. Their collaborations are already well underway through industry association discussions and venues such as the P-LEI.org website. So the lesson this month is: Collaboration and checking with colleagues and counterparties is always an essential ingredient, whether it's for accurately centralizing reference data, bridging gaps for better data quality or determining pricing and meeting regulatory standards.

As an aside, this publication isn't put together by me alone either, and I was reminded of that in early November when I was away due to bereavement. I reflected on this in an online column and would like to thank Nicholas and Max here for their extra efforts that contributed to this issue in my stead.