For financial firms, data is the glue that holds together the systems and processes that take place across front, middle and back offices, from trade execution to order management to portfolio management and accounting. Forward-looking firms are trying to come up with an overall definition, or taxonomy, so that data that gets produced by one system can be recognized as potential input by another.
“In the data space we talk a lot about taxonomy, and having the right business taxonomy data dictionary that goes with it,” said Mark Israel, vice president at Sapient Global Markets. “The next part is the enterprise messaging model, which is really the technical representation of the taxonomy. Then you can map each of the specific systems to that enterprise message model through the taxonomy and the data dictionary.”
The 'Holy Grail' of integration means having order management systems, execution management systems, post-trade systems (confirmation/affirmation settlement processes) and portfolio accounting systems all connected.
This isn’t just an academic exercise, according to Israel. “We have several projects where we’re helping people grapple with the eighty-plus systems they have and creating that taxonomy, and then creating the data dictionary, and the governance around that, and then implementing it with the enterprise messaging model,” he said.
An Investment Book of Record, or IBOR, is a manifestation of the linking of front, middle and back offices. “The portfolio accounting is what's striking that NAV once a day, and the IBOR is what's being used throughout the day to keep track of where orders are, where your positions are, and provide a unified view in almost a real-time fashion,” Israel said.
Having an IBOR is important for compliance purposes, by making it possible to view exposures for Form PF reporting, for example. “If you have an IBOR, you can dial the date you want to report on, roll up those exposures or aggregate them in the way that the government wants to see them, then fill out the right forms and have your data flow into that.”
Eze Software Group has launched Eze Data Services, a cloud-based data hub and integration service to support position and transaction interfaces across the company’s front-to-back product suite.
“We've built a cloud-based platform, and the first area we started focusing on was our data integration framework, where we have long offered a managed service across our OMS, EMS, and PMS client base, but it was on older technology,” Rob Keller, chief product officer at Eze Software Group, told Markets Media. “By migrating that functionality up into our cloud platform, we have a centralized area where we can integrate our on-premises OMS and the PMS with our already SaaS-based EMS [RealTick].”
There are a number of reasons why clients want integration. “One could be workflow related where we have traders that just live inside the EMS, but because of heightened regulatory requirements and internal controls and processes, they want to have a robust compliance engine, and, historically, EMS providers don't have a lot of position data,” Keller said.
The OMS, being more focused on operational processing and making sure that trades and allocations are compliant, has that capability. “For clients that want to just live in EMS to do their quick order creation and execution, we're enabling them to call back into the OMS compliance engine to make sure that those trades are pre-checked before they're executed,” said Keller. “Having that tight integration is something that clients are definitely asking for.”
Featured image via Dollar Photo Club
