Investment Managers Can’t Get Their Hands on the Right Data, Study Shows Pre-T+1 Teething Problems
- Investment Management
- 28.03.2023 06:20 am
Extracting accurate data is one of the biggest reconciliation challenges buy-side investment managers face just over a year out from T+1 for US equities, according to new research from Gresham Technologies plc. (Gresham) in association with WBR Insights.
In a survey of 200 heads of investment operations across global asset managers, fund administrators and hedge funds, 55% cited extracting the right data points accurately and efficiently as one of the three biggest reconciliation challenges. A staggering 90% confirmed that their number of external data feeds increased in the last 12 months. With so much information to sift through, it is hardly surprising the other bugbear that was top of the list for investment managers (55%) was identifying the root cause of trade fails. Building, onboarding and maximising controls was the third biggest challenge outlined by respondents (52%).
Accurate data is becoming increasingly important when it comes to trade reconciliation, as financial institutions continue on their journey to T+1. Inaccurate data, not delivered in a timely manner, is a key driver of trade breaks, mismatched prices, and ultimately, settlement failures. This is sure to come under increased scrutiny throughout the year as the May 2024 deadline looms over market participants to remove one extra day from the US securities settlement cycle.
“Increased volumes, velocity and complexity are causing a complicated data deluge for the investment management community.,” said Neil Vernon, Chief Technology Officer, Gresham “For asset managers and hedge funds to address this, it is absolutely essential that they be able to identify the root cause of fails and invest strategically in their operations. This all comes back to availability and quality of data, and as we have found in this process – firms are flooded with too much data to effectively and swiftly normalise, validate and utilise across operations. It shines a spotlight on the need for collaboration with strategic partners when identifying the ways in which the reconciliations process can be optimised.”