The Devil is in the Data 2

By Will Swift, Securities expert

Welcome back,

I promised I would dig out another wrinkle where a SEDOL identifies a market listing rather than that of a country. I have spared no expense travelling the virtual world to Russia to find an example.

We see multi-listed (Cross-Listed) stock on different exchanges all the time, but there are also instances where stock is multi-listed not in a single country but on the same exchange.

An example is the Russian Federal Hydro-generating Company (RUSHYDRO) http://www.eng.rushydro.ru/, RusHydro is one of Russia’s largest power generating companies.

The company lists its Common Stock under ISIN: RU000A0JPKH7

What is different with RusHydro is it lists its stock twice on the RTS exchange.

One listing in Russian Roubles (RUB) and the other United States Dollars (USD), the LSE gives the stock separate SEDOLs to identify the currency but both SEDOLs are assigned to Russia.

http://www.rts.ru/en/securityresults.html?code=HYDR – USD

http://www.rts.ru/en/securityresults.html?code=HYDRS – RUB

Pop back soon for more wrinkles in the data we see everyday.

The Devil is in the Data

By Will Swift, EDMworks Securities expert.

Being my first entry I hope you find it interesting and in a small way informative.

With Reference Data we occasionally stumble upon data exceptions that make us investigate the rules which we use every day. I was reminded recently of a “wrinkle” in the use of the Stock Exchange Daily Official Lists identifier (SEDOL) when a Client asked for an alteration to a Position report because the “wrong” SEDOL was being displayed. As I’m sure you’re aware, SEDOL is the instrument identifier assigned by the London Stock Exchange (LSE) and we often think of it as a country level identifier, and why not, the definition provided by the LSE tells us so:

“SEDOL codes are a unique country level identifier issued one per country for place of listing or trade. Each SEDOL is partnered with a Market Identification Code (ISO 10383 MIC) also creating a unique market level identifier.” http://www.londonstockexchange.com/products-and-services/reference-data/sedol-master-file/sedol-master-file.htm

 

The “wrinkle” I have in mind occurs with multi-listed stock in Dublin and London. While the LSE assigns SEDOLs for both Dublin and London we often find only the London SEDOL in use. An example is Irish Continental Group. The LSE allocated 3339455 for the Dublin listing and 3333651 for London.

Yet, when we look on the Irish Stock Exchange (XDUB) we find they’re using the London SEDOL.

Having spoken with the LSE about this they give the following disclaimer:

“The Irish Stock Exchange doesn’t use London codes that are issued now, but you may find that they are using them for existing listings.”

There are other SEDOL “wrinkles” I would like to share over the coming weeks so pop back for more insight, It is always interesting to find these odd conventions, they remind us why when we hear the statement “That’s simple – It’s only Reference Data” we know the Devil is in the data.

EDM Planning in the Investment Sector. Using Togaf and Open Systems Method

Customer demands are changing radically in the investment sector. Market volatility has played havoc with long term pension scheme planning. Liability Driven Investment (LDI) and other investment planning approaches are emerging that increase the pressure on Fund Managers to develop effective new products and investment strategies. Regulation is also on the increase as investors and governments are demanding much greater transparency and openness in investment practices.

Risk has to be managed more closely which means that information on Issuers, Guarantors, Counterparties and other risk carrying entities has to be managed effectively and integrated with existing systems. Together with the natural growth in competition, these factors place huge pressures on Fund Management companies to make radical changes.

Data is fundamental to any investment enterprise. Effective, economic management of data underpins existing operations and enables the transformations that will be required to satisfy changing customer demands, competition and regulatory pressures. So Data warehouse(s) and other aspects of the overall data architecture become much more critical to the enterprise. The question is what process must the organisation adopt in order to identify, plan and implement all the necessary business and system changes.

The Enterprise Data Management (EDM) plan is the starting point to making effective change throughout the enterprise. It states the destination and describes how you will get there. It defines benefits and costs. It outlines potential risks and provides guidance for handling them. It gives a set of measures that can be used along the way to judge progress and adjust the journey according to changing circumstances.

Knowledge is essential for effective planning. Knowledge of the enterprise and its relationship with the wider investment sector is crucial. Knowledge of architectural concepts is important to the development of a realistic plan.
Enterprise Data Planning is based on proven business planning disciplines. Key architectural layers for data and applications are then added in order to provide an enterprise wide understanding of the uses and interdependencies of data. This enables the definition of the core components of the EDM plan:

- Industry structure and business objectives
- Assessment of systems and services
- Target architecture for applications, data and infrastructure
- Target organization structures
- Systems, database, infrastructure and organizational plans
- Business case, costs, benefits, results and risks.

The Open Systems Group have evolved the TOGAF enterprise systems planning process for this purpose. It acts as an extension to good business planning methods to provide a framework for the development of the systems and data architectural components that are essential to the development of a realistic program for enterprise wide change for a fund management company.

 This blog article is by Dennis Slattery, CEO EDMworks

The Enterprise Data Repository

This article  explores the need for an Enterprise Data Repository (EDR) to underpin the operations of an Asset Management company. Dennis Slattery, CEO, EDMworks.

Too often, budget processes and short-term pressures cause tactical fixes that conflict with longer-term goals. The result is an increase in legacy systems, poorer service and rising costs. This article identifies changes you can make.

The past year has been particularly tough because of the difficult economic background and unstable worldwide politics and the new year looks set to follow. The consequence has been a greater emphasis on value for money. This presents opportunities and threats. Opportunities because it gives the power to encourage business users to really justify their demands and say ‘no’ to time-wasting users. Threats exist because the allocation of money to individual business units makes it difficult to justify or champion genuine infrastructure or knowledge developments that will benefit the organisation as a whole.

The typical IT budget:

- Top management lay down broad guidelines
- Managers clarify objectives, identify work programs and make broad estimations of their costs.
- IT review infrastructure and potential business developments.
- The draft budget items are consolidated which invariably demands more money than available
- A committee is established which adjudicates on budget conflicts. In reality there is a lot of arm- twisting.
- The budget is more or less agreed but rarely gets absolute sign-off.

Once the budget year starts, the business priorities and new regulatory issues/crises invariably sidetrack the organisation.

What do we need to do better?

We have to add a focus on ‘information’. We need to become aware of the use of client, account and other data. Armed with that awareness we can introduce processes that will lead to convergence of information.

There are seven key points that make a real difference to effective information management:

- Develop effective methods of gathering information needs.
- Define a clear Information Architecture that can be easily communicated.
- Organise the IT department to focus on information management.
- Adapt the budget process so that it becomes a planning aid.
- Modify projects to satisfies functional goals and also information goals,
- Create a MIS project.
- Educate people.

Some of these items are discussed in greater detail below.

The information architecture

It is essential people understand the information that is needed by the organisation and its external users. To achieve that we need an Information Architecture. The architecture has to be understood by both IT and end users. It therefore has to be constructed on two levels:

1. It must specify the underlying data subject areas in a way that can be implemented on a relational database. For this we can use conventional entity-relationship modeling tools and techniques. Example of data subject areas are parties or accounts.

2. It must communicate the view of the specific functional area. If we were discussing counter-party risk management then we would expect to see a diagram containing brokers, custodians as individual entities. These are views on the underlying database that implies that the architecture has a data transformation layer

General knowledge structures

Asset managers deal with individuals and organisations. The repository must have data structures that deal with organisations, individuals, work- flow and management metrics:

- People, organisations, contacts and roles
- Countries and currencies
- Calendars, time and time zones
- Processes, events and work flow
- Management and metrics
- Documents

Asset management knowledge structures

Next comes the specialist knowledge. The EDR must support all types of investment, service or wrapper that are used by the company:

- Accounts, portfolios, funds
- Models and benchmarks
- Products, services and agreements
- Cash, equity and fixed income securities
- Unitised securities
- Commodities, FX and derivatives
- Property, art, collectables and other assets
- Orders, allocations and executions
- Classifications and hierarchies
- Fee structures, accruals and invoices

The blog is written by Dennis Slattery, CEO EDMworks. Dennis has 1st class honours degree in computer science and has extensive experience of Asset Management systems design. He has built several enterprise repositories for Asset Managers and is the designer of the integral Asset Management Enterprise Data Repository.