Efficient Benchmark Data Management

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Efficient Benchmark Data

Management

Managing Index Data & Benchmarks for

Enterprise Consumption

Research Results 2011

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© RIMES 2012 1

RIMES

BENCHMARK DATA SERVICE

Andy Barrow

SVP, Head of Asia Pacific at RIMES

Doug Neill

Principal at Investit - Australia

Today’s Presenters:

Doug heads Investit’s Australian operations, working with clients in Australia & Asia to build efficient investment organisations. He has extensive experience in working with clients to assess, plan &

implement operational & systems solutions. In particular he was responsible for developing a deep reaching operational assessment & alignment methodology allowing firms to truly assess the value of their IT and operational investment. Doug formed the Chief Operating Officers’ forum in Australia to facilitate the collective discussion about local & global issues affecting the industry as a whole. He is a regular contributor to the Investit Intelligence service. Prior to joining Investit Doug held senior

IT positions within the investment management industry in the UK & Australia.

Andy heads RIMES’ Asia Pacific operations and has had 20 years’ experience working with financial benchmarks across all asset classes in the front- & mid-offices. He worked with Datastream [when it was Primark] adding international equity benchmarks to the iconic Datastream Research Service; Reuters [before it Thomson Financial], working with numerous proprietary data & analytics providers; Thomson Financial [after they merged with Primark but before they before they became Reuters], continuing the development of benchmark servicing solutions. For the past 10 years, Andy has helped to build RIMES’ multi-award inning cloud-based Benchmark Data Service.

Managing Index Data & Benchmarks for Enterprise Consumption

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© RIMES 2012 2

RIMES

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RIMES Technologies

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DEFNs:

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Indices, Benchmarks, Customisations & Blends

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Benchmark Architecture [Benchmark Platform]

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Benchmark Data Service

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State of Play

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Commissioning the Investit Research

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The Results – Doug Neill

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Questions & Comments

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Next Steps in Market Outreach

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RIMES’ BDS Research Insights

Agenda

Managing Index Data & Benchmarks for Enterprise Consumption

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© RIMES 2012 3

RIMES

36

country presence

RIMES Technologies

25

system partners

500

data sources

100+

data partners

195

clients

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Our Business is to Help Clients Reach Greater

Efficiencies in the Management of BMs

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Born in ‘96. Australian from ‘02. Now Global

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Significant Operational Scale

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13,000 Fully Services Daily BM Files



Unique Benchmark Data Expertise

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Offices Around the World

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Outsourced Solution Must Understand More About

the Problem than the Client

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© RIMES 2012 4

RIMES

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Indices, Benchmarks, Customisations, Blends

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Benchmark Data Architecture [Data Platform]

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Benchmark Data Service

Definitions

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© RIMES 2012 5

RIMES

Benchmark Data Service – The State of Play

1.

It’s a Seller’s Market for Benchmark Owners

2.

Growing Complexity

1.

The End of Alpha & Manufactured Beta

2.

Customisations & Blends

3.

Licensing – Where is the Game of Monopoly

2

Headed?

4.

Licensing – the Benchmark Auditors are in the Field

5.

Architecture – Drivers for Great Efficiency or Great Cost

1.

EDMS & Warehousing Benchmarks

2.

Where Should Blends be Calculated?

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© RIMES 2012 6

RIMES

Commissioning the Research – Serendipity

1.

The research focuses on large, diversified, internationally invested asset managers

2.

We marketing messaging showing that when AMs use RIMES as a specialist provider of BDS,

the TCO reduces by much more than our subscription charges – spend to save, a pure value

investment

3.

What startled us:

•

TCO for BDS is not known

•

The effect of architectural choices on the scale of TCO is not understood

•

Managers really have no functional mechanism to find out

4.

What we probably knew anyway:

1.

AM’s are universally dissatisfied with the scale of license fees charged by proprietary BM

providers

2.

A large resource commitment is made towards negotiating more favourable commercial

terms with proprietary BM providers

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London  Boston  Dubai  Sydney

Managing Index Data & Benchmarks

Doug Neill

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Background to research

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Survey – 2Q11

34 investment management firms participated

Combined AUM ≈ $10.5tn

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Challenges and Current Practices: Continued Growth

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72% of managers expect to see an increase in the use of index data in their

business

72% of managers expect an increase in demand for indices from emerging

market exchanges and specialist vendors

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Challenges and Current Practices: Market Influence

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Increased complexity of investment strategies

More detailed analysis of investment portfolios

Growth in the number of indices available

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Challenges and Current Practices: Index Data Usage

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42% of managers use more than 100 equity indices at index level

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Challenges and Current Practices: Benchmark Usage

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Challenges and Current Practices: Sourcing Index Data

13

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Challenges and Current Practices: Major Concerns and Issues

14

Index Data

Cost

of buying index data

Managing relationships

with index data providers

Quality

of index data provided by external sources

Number

of indices that need to be supported

Timeliness

of getting data into the business

Benchmarks

Number

of customized and blended benchmarks

supported

Complexity

of creating and monitoring use of

customized and blended benchmarks

Internal costs

of maintaining benchmarks

Volume of data

required to support benchmarks

85%

Stated external

cost of buying index data as a major

issue.

60%

Stated the number of customized

and blended benchmarks to be

supported as the main issue.

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Challenges and Current Practices: Cost Perceptions

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93% of firms believe license costs to be the largest cost in using index data

86% of firms consider fees to be excessive

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Index Data Operating

Platform

73% consider platform to be strategic

71% consider platform capable of

supporting future business growth

Benchmark Operating

Platform

86% consider platform to be strategic

81% consider platform capable of

supporting future business growth

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Challenges and Current Practices: Operating Platform

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

60% manually collect

index data for

alternative assets



37% cannot manage

late delivery without

significant impact on

business



61% use a data

warehouse to store

index data

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45% store

benchmarks in

business applications



61% centrally validate

traditional asset data

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26% use manual

validation techniques

to confirm constituent

count and market

capitalization

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89% distribute

consistent data to

business teams, in

correct format, on time

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29% do not maintain a

golden copy

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Conclusions

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Complexity of investment strategies will continue to drive demand

Expect continued growth in the use of customized and blended benchmarks

Market data costs will continue to escalate

Focus on internal costs as well as external costs

Use of specialist providers as source of index data results in more effective

operating platform

Measure effectiveness and maturity of data processes to manage costs and meet

business demands

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www.investit.com

investigate



assess



achieve

Page 19

Managing Index Data and Benchmarks

Questions?

page 19

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RIMES

RIMES Insights

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Initial work suggests BDS TCO multiples of between 4 &

10 times subscription license costs & the multiple

depends on efficient BDS architecture

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Deep efficiencies

are available

from a more enlightened

approach to TCO capture & enterprise architecture

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Asset managers should stop obsessing over

subscription license costs – there are bigger & more

elastic costs at play

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If you’re going to scale up through product build or

merger/acquisition, don’t

assume

the capability

blueprint offered by larger European managers will

deliver any real value

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RIMES

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Outreach will continue



Efficient BDS White Paper

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BDS Capability Maturity Modelling

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BDS Round Tables

RIMES Outreach Programme – Next Steps

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RIMES

“Banking & Finance ICT Innovation”

Banking & Finance Awards 2011

“Best Data Provider to the Buy Side”

Buy Side Technology Awards 2007, 2008, 2009, 2010, 2011

“Best Implementation at a Buy Side Firm”

Buy Side Technology Awards 2011

“Best Enterprise Data Management Initiative

”

Inside Reference Data Awards 2010

“Most Innovative New Service”

Efficient Benchmark Data Management