Data Managers Climb The Ladder

As data silos topple, data managers at investment firms find they must understand the business lines they serve
The goal today is building a consistent data repository, says Paul Yaron, managing director and principal at Bear Stearns & Co., which relies on a spoke-and-hub model. "You bring all this outside information in and cleanse it through a consistent process to put it into a consistent model," he says. That becomes the hub. The information then is redistributed through the spokes of the receiving applications at the business units, which can use the data for whatever they need.

The goal is to build a consistent data repository, says Bear Stearns' Yaron (left, with Bottega and White).

The goal is to build a consistent data repository, says Bear Stearns' Yaron (left, with Bottega and White).

Photo by Stephen Aviano
Another challenge data managers face is coping with the growing amounts of data flowing through an organization, especially into the front office, thanks to improvements in electronic trading and order-management systems as well as decimalization and algorithmic trading. It's forcing data managers to become air-traffic controllers and telecommunications experts.

"The raw-message traffic has gone up exponentially," says Jenny Drake, managing director of the corporate client group at Archipelago Holdings Inc., which runs the Arca Ex stock exchange. "There are more messages coming in, and being able to deal with that is becoming a bigger and bigger issue." Data managers must understand things like bandwidth and connectivity, and companies need bigger pipes to process all the information. "You need to ensure systems are in place to process messages at very high frequency to keep trading platforms up to date," she says.

With tighter controls and management, the industry will see cost savings in this area down the road, says consultant Jordan. "Market-data management has gotten to be a much more disciplined process," he says. Before, he adds, the process was ad hoc and wasn't managed effectively or aggressively. But with real-time data driving everything from algorithmic trading to the creation of derivatives, it has made information more valuable and a major cost component that many data managers are grappling with. "Many people still don't know what they're spending on market data."

Data managers increasingly are being tapped to play a greater role in helping their firms manage and understand market risk. The task is magnified by the rise not only of algorithmic and automated trading, but also through the creation of and reliance on derivatives, which blend multiple financial products. That means the underlying data must not only be solid, it must be able to be tracked as it morphs its way through trading scenarios.

When it comes to derivatives, reference data is critical, says Bear Stearns' Yaron. It's far easier to model and track information around a single security than derivatives. "It's definitely a challenging area, and it's only going to get more challenging as new types of instruments are created," he says.

The need to know more about everything from compliance to risk management and the nature of the products that investment firms manage means that data managers must be jacks-of-all-trades and able to speak to the different business lines. As such, data managers say the job requires more business skills than technologist skills. "Knowing the business is the first thing that a data manager really needs to grasp," Yaron says. "Then there's a broad set of technology skills that come after that."

Data managers also must be astute diplomats. "You need to be a good proselytizer, a zealot," says TowerGroup's Lind. "You need charisma. You need a vision and the ability to get the different lines of business and political apparatuses to work together to create a governance process that works."

Still, for data managers, the bottom line comes down to understanding the business. Says Credit Suisse's Bottega, "You can't be a technologist on Wall Street unless you know something about the business."

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