While many buy-side firms have been working hard to improve data governance, they could easily hit some roadblocks as they go down this road.
Companies frequently run into challenges figuring out how they are going to organize their data, as well as its policies and procedures. Financial institutions in particular frequently find they have accumulated a collection of networks and systems, according to Waters Magazine. They could end up in this situation as they prepare for regulations or go through mergers and acquisitions.
Industry participants frequently use centralization as a cure-all for this situation, the media outlet reported. While many believe that the ability to get all important information in one place is highly beneficial, there are difficulties that come along with this. For example, buy-side firms might receive conflicting sets of information.
Another major problem is users getting all their information from a common place and then changing it downstream to fit their purposes. Doing so can result in data changing format.
Once buy-side firms have organized their data in an acceptable manner, they can start focusing on developing an ideal data governance framework. However, institutions can encounter numerous cultural challenges when accumulating the momentum to establish and maintain a set of policies and procedures, according to Waters Magazine.
For example, buy-side firms might have a hard time getting the buy-in they need to successfully launch a data governance program. In order to set one of these up, an institution would need to convince individuals at all levels of a business that such a framework was needed.
Getting the board’s attention
At a recent round table that was held by Waters Magazine, one participant noted that board-level directors focus on data only in specific circumstances.
“From my experience, the only time the board level gets concerned about data or interested in it is when we have an issue directly led by a data problem,” the individual said, according to the news source. “It tends to be a pricing error or a benchmark not updated correctly, so you try to have a conversation about data, but they’ll focus in on one area. Data is so huge, it’s very hard to get your arms around it and explain to people what you’re talking about. It’s easy to go down the silo of market data, for instance, but it’s not just about market data. It’s about all of it, whether it’s internally generated, or externally.”
Alternatively, a person who champions data governance could find that the board of directors is convinced, but that staff at other levels of the business are not on-board. If the operational managers and the rank-and-file are not willing to play ball, efforts to implement the proper framework will fail.
Competing for scarce resources
Some buy-side firms are having a hard time focusing on data governance because so many other concerns are competing for their time, energy and money, the media outlet reported. One person at the round table noted this challenge.
“Most firms are pretty nimble, but at the moment, we’re just prioritizing for the next deadline,” the individual said, according to the news source. “And it’s a requirement, it’s not a case of IT saying that there are other priorities, it’s a regulation that they have to follow. It’s very difficult to resource those different projects.”
Data ownership challenges
Another difficulty that buy-side firms encounter is questions surrounding data ownership. While many believe that information is the lifeblood of an organization, many companies encounter confusion regarding who has responsibility for this crucial resource. Mission-critical data could easily by split up in many different places. Alagappan Sethuraman, who heads up data management at Singapore-based Eastspring Investments, told Waters that after organizing their information, many companies must next figure out how their organization perceives it.
“The primary objective of our data governance program was to manage the data operationally,” he told the news source. “That was a huge challenge for us – our data now sits in a centralized platform, which is being accessed across multiple locations in Asia by different business units.”
“From there, it moved on to questions of ownership and looking at data as a technical term or a business term, and how the business views it,” he added. “In most organizations, data resides within technology or with operations. Our challenge was to articulate to the business how significant data was to them, and that it’s not just the responsibility of data management or technology to ensure its accuracy.”
In the current landscape, various factors – including regulation and a desire to effectively manage costs – are pressing buy-side firms to establish proper data governance. By setting up this framework, institutions could enjoy many benefits. However, organizations that want to reap these rewards should know the many challenges they can face.
- ESMA Consults on Broadening the Scope of MAR
- EU Regulators Turn Tough on Market Surveillance Compliance
- SOTERIA and RIMES Technologies Partner to Provide a Real-Time Integrated Trade and Communication Surveillance Solution for Financial Services Firms
- The ETF Market is About to Explode: Is Your Firm Ready?
- RIMES Hires New Head of Sales for Asia