Basel III, Dodd-Frank, MiFID, AIFMD and assorted other regulations have introduced significant new analytical and reporting requirements.
These requirements include understanding data, data structures and corresponding subdata that need to be aggregated, which transcend standard recordkeeping systems.
“IT is very good at providing the data for a single trading desk,” Alex Tsigutkin, CEO of AxiomSL. “Once we try to roll up and report across numerous data sources and stores, the problem becomes one of integrating the stove pipes. As we create roll-ups higher and higher through the organization the integration problem becomes increasingly acute.”
AxiomSL provides technology for regulatory reporting and risk management, with a strong emphasis on data integration and data warehousing solutions, according to Tsigutkin. “We cater to both buy-side and sell-side markets globally, and operate in ten different countries and are expanding rapidly to help financial institutions with a growing number of regulations that they need to deal with,” he said.
The key issue with data management is “growing volumes of information needed to satisfy demands of different regulators, as well as within the institutions, and how can this be satisfied with the technologies that are available on the market today,” said Tsigutkin. “When you look at the type of reports that need to be created, analytical information needs to be available to decision makers at the start of the day, rather than at the end of the day.”
Investment book of record is a hot-button issue in investment data management. IBOR makes information available to traders and investment managers at the beginning of the trading day, so that it reflects what happened to the information since the end of the previous business day.
“What happens, especially in global markets, is if you rely only on the end of previous business day information, you may not have accurate information to make your decisions at the beginning of the day,” said Tsigutkin. “So this is a largely data management related problem, which requires data to be constantly updated and reflect events. This is an example of a data integration problem.”
Explaining what's behind the numbers is a non-trivial task. “People realize that they need some technology solutions that would enable greater transparency to not only explain what's behind the disclosed information, but also to be able to compile the information and create the reports much more efficiently as the regulations become much more complex,” Tsigutkin said.
Tsigutkin founded AxiomSL 20 years ago to solve data integration problems. Then, as today, data resided in a variety of different systems, and a typical approach to bringing data together was to come up with some fixed data model. That worked for some time until financial institutions began to be regulated much more and transparency became a big issue to the market place. “By transparency, I mean that people would like to know what's behind all the disclosures of the financial soundness and the risk disclosures of the financial institutions that regulators collect,” said Tsigutkin.
On the buy-side, AxiomSL’s customers include asset managers, alternative investment managers and large investment management firms that are looking to cope with the most recent regulatory disclosures requirements, such as Form PF and AIFMD.
“This market has not been traditionally subject to many regulatory reports, but over the last few years, SEC as well as CFTC requirements, have been put in place to require this kind of granular information disclosure of risks and institution and investments,” Tsigutkin said.
Featured image via Dollar Stock Photo
