Asset managers’ lives could be made easier if they had access to a high quality source of fixed income data – and the technology solutions to enrich, analyse and normalise such data. That is the argument made by GreySpark, a consultancy firm, which suggests pre-trade and post-trade analysis, as well as portfolio risk, could all be enhanced.
Post-MiFID II, access to buy-side data has become more straightforward, allowing firms to combine publicly available data with their own proprietary sources of trade data. However, firms are unable to make much sense of the volumes of data they have access to, hampered in part by data quality issues and the lack of a post-trade consolidated tape for fixed income markets in the EU, GreySpark said.
“A solution that enables users to easily locate and analyse the data and draw out insights via API is clearly becoming ever more desirable as firms, in anticipation of the consolidated tape, see ever more use cases for the data,” GreySpark noted.
Looking at pre-trade analysis, GreySpark noted: “Fragmented availability of data can make even simple data points, such as prices, non-trivial to obtain and analyse, and others, such as volumes, very difficult. Even when all the data is available in a timely manner, being able to extrapolate these metrics could require significant analytical effort.”
In post-trade, there is “a clear need” for market data, particularly when it comes to generating management information and benchmarking and strategy data.
It will be technological solutions that advance data wrangling capabilities, GreySpark believes, pointing to solutions in portfolio risk that enable accurate analysis of volume data. And although a lack of any post-trade consolidated tape for fixed income markets in the EU hampers transparency, it is not clear to what extent the EU consolidated tape for fixed income will address the data issues.
GreySpark highlights FINRA’s Trade Reporting and Compliance Engine (TRACE) in the US, adding that some US asset managers have hinted that it still does not cover all their needs and wants, as evidence that a consolidated tape might not be a silver bullet.
“This suggests that there will be as much of a need for additional fixed income data technology solutions for the buy side when the EU consolidated tape comes into play, as in the interim period.”
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