Four out of five financial institutions see badly managed reference data as a major cause of internal straight-through processing (STP) failure, according to a report from TowerGroup, Reuters and Capco.
The research surveyed 131 financial markets industry professionals around the globe and found that on average, 30 per cent of failed trades are caused as a direct result of poor data management. The chief cause of the fails is attributed to the inaccurate identification of settlement counterparties.
Despite the problems, 37 per cent of respondents do not have a reference data strategy. In addition, 55 per cent do not have, or are unaware of, the existence of defined data reference standards within their organisation.
One in ten organisations employ over 200 staff to re-key information, with a third of respondents indicating that 90 per cent of their data is updated manually. Only four per cent of respondents have automated maintenance for over 90 per cent of their data.
The research also reveals that the average number of client records and instruments held is over two million. Nearly half of those who took part in the survey say this data is held in ten or more systems across their organisation. In eight per cent of cases the data is held in more than 150 systems.
Martin Cole, managing director, Reuters Consulting, comments: “Achieving true STP in an environment full of disparate and unconnected systems is a huge challenge, and one which TowerGroup predicts the global securities industry will spend an estimated $19bn on over the next four years alone."
Roger Preece, partner, Capco, says: “Accurate, consistent and timely reference data is one of the key foundation blocks for achieving STP, managing risk and performing effective client relationship management. It does not exist at the moment and therefore must be one of the major priorities for industry participants."
Reuters and Capco recently outlined plans to invest up to £32 million cash in the formation of a new joint venture company to develop a range of software data management services for improved STP.