Getting good accurate corporate data within an acceptable time frame for the market to make decisions and act you would think was problem that disappeared years ago. The fantastic increase communication efficiency, the scope of media coverage and the introduction
of electronic message standards are all plus points that should have already eliminated data problems. They have not! Why? The main problem is not really a technology issue or one of cost or access. The real problem is vested interests in the market data chain.
The data chain has been a historical creation, which like all things that are evolutionary does not make much sense. The litmus test is always to think that if you were designing something from scratch would you arrive at the same end point we have today.
In the case of corporate data and the market the answer is no.
Corporate data is not standardised at source and begins its meandering way into the market via the Chairman’s statement or via public relations/advisors into the news agencies and then Stock Exchanges and data vendors. By this stage the non-standard corporate
data has already suffered from ‘Chinese Whispers’ type threats and is probably abridged or missing data. Stock Exchanges and data vendors do their best to ensure that the data is as complete as possible and for the first time normalise it into an electronic
standard, probably ISO15022 but this could be soon ISO20022.
Happy days one might think, as there is now an electronic machine readable standard which is bought by Custodians and Investment Banks. Who by the way, due to the potential for misinformation, buy the same data from more than one vendor and then scrub or
data cleanse it, to arrive at what they hope is a totally accurate representation of what the corporate or Issuer has presented to the market via the Chairman’s statement. This scrubbed data is then effectively sold as part of the service by the Custodians
to their clients, who then possibly resell it to their investing clients as part of their service.
So this is the market data chain. A non-standard initial distribution, going through multiple iterations and systems, viewed by umpteen eyes, cleansed and sold and resold again and again.
Do you know what, it‘s costly, its risky it’s too expensive and it does not work!
The next Post-Trade Forum debate on corporate actions risks will discuss these issues and more on the morning of the 27th October. Joining the panel of industry professionals is Daniel Thieke, VP, DTCC.
In 2011, he assumed responsibility for DTCC’s Global Corporate Actions services, which provide a corporate action announcement solution for equities and fixed income instruments traded in Europe, Asia-Pacific, and the Americas. No doubt he will provide an
insight into the DTCC project with XBRL and SWIFT in the USA, which is attempting to resolve a number of the aforementioned problems.