The forum organized by RIMES Technologies in Paris on 12th June 2014, helped many to exchange information about this topical subject.
Since the financial crisis, new rules and regulations have made it crucial to have reliable index and benchmark data, particularly when it comes to Solvency II and Basel III regulations, which have high requirements for risk management.
The Solvency II challenge
Solvency II, as explained by Alain Robert–Dautun, Head of Risk Management at Sycomore AM expects data accuracy, completeness and relevancy as essential goals for asset management firms, and broken down into five challenges:
- Data mapping, establishment of a data dictionary given their attributes and ownership
- Optimizing data transformation to produce good format reporting
- Data quality control to find potential errors
- Adequate data storage
- Flexible reporting engine disposal
Managing index & benchmark changes
RIMES, which provides a fully managed data service covering 800 data sources from 200 data partners for 260 clients, dealt with this topic by publishing a Data Governance Handbook. The Handbook details best practice in index and benchmark data governance, acquisition and decommissioning. Most of the asset managers who attended the forum shared their concerns about data governance especially when it comes to decommissioning. The process of adding new index data can be fairly straight forward but when it comes to discontinuing databases which are no longer needed, the process is not as obvious.
Watch out for cost
Special attention was brought on the acquisition cost for new index data:
“We must educate our institutional clients on the relevancy of certain composite indexes” said one of the attendees. “Solvency II will provide us with an opportunity to talk about cost with our clients.”
Why reinforce data governance? Because it can decrease operational risk, ease out decision making and create an opportunity to build products in line with regulations.