For some capital markets firms, manual data reconciliation adds millions of dollars in expenses every year, according to Audrey Costabile, Senior Analyst for Coalition Greenwich Market Structure & Technology.
According to a new study by Coalition Greenwich in collaboration with Axoni, titled Operations Data-Sharing: A Critical Time to Innovate, capital markets data has exploded in terms of both volume and types.
The growth of electronic trading, the creation of new products and strategies, and a surge in market volatility are all contributing to the boom in data.
“Across the industry, firms must embrace innovative data tools if they are to meet changing regulatory and operational demands while also ensuring data privacy, accuracy and efficiency,” Costabile said.
Many of the capital markets firms participating in the study are still using decades-old methods including email and FTP file transfers to share data in bulk, typically once a day at close of trading.
As a result, over 90% of study respondents at large banks and asset management firms view periodic batch reports as problematic.
The use of traditional data-sharing methods is slowing workflows, imposing huge costs, and introducing risks stemming from unwieldy data pipelines and/or stale data.
According to the findings, over half of data consumers still use Excel (64%) and FTP/SFTP (53%) for bulk trading and post-trade reports.
At large firms, 83% of respondents believe extract, transfer and load (ETL) solutions are challenging due to growing volumes of data, complicating efficiency and increasing the risk of errors.
A majority of all respondents (85%) prioritize restricting third-party vendors from accessing their data, emphasizing the importance of data privacy.
In an ideal world, the number of participants that would opt to receive trading or post-trade reports in real time versus the current once per day set up showed a 125% increase.
“As regulators apply more scrutiny to firms’ operational processes, data formats and governance, mitigating operational risk has become top-of-mind for management teams, and technology and process improvement have become critical industry-wide goals,” commented Costabile.
Technology solutions promising to alleviate these data sharing and management issues are slowly gaining traction as participants are indicating a strong preference to receive trading or post-trade reports in real time or throughout the day versus just once per day.
These are important developments as operations professionals try to get in front of exceptions management issues faster and with fewer manual touches.
The report presents the full results of a 2024 study that analyzes the data-sharing practices of capital markets firms, including “consumers” of data (buy-side firms, banks and broker-dealers that receive bulk trading or post-trade reports) and data producers (exchanges, trading venues, market data providers, fintechs, and central counterparty clearing houses) in the U.S. and the U.K.
