Data challenge for investment managers
Managing data has become an increasing challenge for investment managers, not only because there is more data to be managed but also because they have to report more data to regulators than ever before. That challenge is added to by the breadth of instruments and asset classes and geographies that they have to cover as a core element of their business.
An individual investment management firm may not have to cover as many instruments as its sell-side brokers, which have to serve many clients that each have a broad range of differing requirements. However, an investment manager has to be able to access information about any instrument of any asset class anywhere in the world that may be relevant to a fund or a client, and once that instrument becomes part of a portfolio, all of the information about it has to be managed, updated and reported on. Trying to ensure that the firm can accurately identify each and every specific, unique instrument is a mammoth task, as there has never been a global standard that everyone uses to identify all financial instruments.
That’s one reason why it’s interesting that so many major buy-side firms are already using the new FIGIs – Financial Instrument Global Identifiers. Of the top 30 firms using FIGIs, all of which are major global financial institutions, half of them are buy-side-only firms, and many of the rest include buy-side business units within their enterprise. FIGIs are the new open-standard identifiers that have already been allocated to over 200 million financial instruments globally, across all asset classes – far beyond the reach of any other industry-standard identifiers.
Sometimes investment managers can be slow to take up new technologies, but, in the case of FIGIs, some of the world’s largest buy-side firms are ensuring that they are taking first-mover advantage.
In September 2014, the financial services industry came one step closer to embracing a system for naming financial securities that is non-proprietary, offers broad coverage and is universally available without restrictive license terms and fees. Board members of the Object Management Group (OMG), a not-for-profit technology standards consortium unanimously voted to adopt the Financial Instrument Global Identifier (FIGI) specification as standard methodology for identifying financial instruments.
The methodology behind the FIGI is based on Bloomberg’s Open Symbology, or BSYM, a system Bloomberg developed for identifying securities across all global asset classes. BSYM provides a library of 200 million unique identifiers, initially called BBGIDs, which are assigned to financial instruments such as equities, fixed income, indices, derivatives, currency and structured products. The BBGID – now known as the FIGI (in order to allow for a neutral, generic standard that avoids the branding issue) – is a comprehensive, open and unchanging identifier that has helped financial market participants, third-party data providers, exchanges, governments, settlement agencies and regulators improve connectivity, interoperability, transparency, and efficiency in the financial market place.
Chris Pickles is an independent fintech consultant and member of the Bloomberg Open Symbology team