Reference Data is a Hidden Risk and Bottleneck

What is the deepest, darkest corner of your company's infrastructure? While I'm sure you have spreadsheet spaghetti that you'd prefer to replace, that issue is already out in the open. What you may not realize is how much your company's reference data solution (or lack thereof) is a productivity bottleneck and a hidden operational risk.?

If you're unfamiliar with reference data, it's probably just the term that is new to you. Sometimes reference data is referred to as static data because it almost never changes. We're talking about exchange symbols, expiration dates, contract specifications, etc. And as you probably know, everybody uses different symbology. The ticker or instrument ID you get from an exchange will not match Bloomberg or your clearinghouse's ID. Are your quants using third-party market data? That's another mapping you need to keep track of.?

Unfortunately, many companies also compound the problem by letting each department (front office, risk management, back office, etc) use its own symbology and mappings, creating an unbelievable amount of friction on a daily basis. And how do you change reference data when there is a corporate action? Does every system in your enterprise get updated at once??I have seen market makers get into serious trouble when a symbol they are tracking changes and they miss updating a reference here or there.

While this isn't the sexiest problem to solve in financial services companies, maintaining all of these mappings complicates your daily operations and introduces risk. Luckily, some standardization is available.?

FIGI, an acronym for Financial Instrument Global Identifier, is an open symbology created by the Object Management Group, a non-profit organization with a mission to develop open, global standards.?

A unique ID for financial instruments, a FIGI also comes with enough relevant metadata to help you figure out which instrument you're looking for. And did I mention that even Bloomberg is on board??

I hope you take a minute to shine a light on all of the hidden ways your company is dealing with reference data. It's often a problem managers are unaware of, but once you start asking people about their reference data problems and tie the threads together the size of the issue quickly becomes clear.?

So clean up your symbology by switching to FIGIs. Start by building FIGI adapters for your existing infrastructure instead of making wholesale changes. If you need assistance, please reach out. Our machine-learning-based symbol adapters can quickly get you switched over to using FIGI. Let's remove an unnecessary risk in your operations and increase your team's efficiency.