Data is everything, everything is data

The life of a trader has evolved significantly over the last few years. Previously managing data from one or two channels of communication, technological advancements and the rise of modern day communication platforms, such as social media, are now forcing traders to consider growing volumes of data from multiple sources all needing to be captured, archived and analysed. I was recently attending webinars on “Leveraging social media signals in finance” and “How traditional financial sources are lagging behind with the rise of alternative data” – both hot topics in our industry. This led me to want to explore the topic around data within the trading environment, including actual trade data, blotters & history – regarding everything that takes place around a trade, as well as wider trading floor communications. 

Indeed, both mobile and electronic trading communications have increased significantly over the last few years, which is reflected in the upcoming MiFID II rules that extend the scope of communications to include all types of interactions. When we now talk about ‘trading floor communications’, this includes fixed line and mobile calls, emails, and instant messages – from Bloomberg and Reuters to MSN or Skype. Furthermore, social media is playing a bigger part in the growth of data that traders need to manage. The likes of LinkedIn, Facebook and Twitter are becoming a greater source of information on the world and trading, and more significantly still, becoming a new communication tools in the pre-trade lifecycle.

This is an ever-growing challenge for financial firms who must capture data from all their regulated users involved in pre-, during and post-trade activities and include communications from far beyond the trader’s turret. Focusing exclusively on the financial markets, the ability to apply analytics to anything from trade execution and overall trader performance, to finding inefficiencies in a trading workflow, can offer firms the kind of governance and oversight which was simply not possible in the past.

One of the biggest changes for businesses is that these new interactions are creating significantly greater volumes of data from disparate sources that must be retained and managed for potential regulatory requests and review. Unsurprisingly, most firms want to manage this data holistically as opposed to using a resource-intensive and siloed approach to each type of data source. The main reasons are that they value and want to:

1. Invest in a global, secure, scalable and on-demand communications information governance platform
2. Rely on a platform that stores and catalogues both e-communications and voice communications – seamless capture, archive and analytics through a convenient and cost-effective cloud-based system instead of one requiring more onsite infrastructure and people to manage
3. Automatically address data sovereignty challenges around where data can be captured, stored and shared from country to country
4. Leverage next-generation technology with industry-leading partners to ensure their information governance efforts are as comprehensive as possible and as easy to integrate with innovations to come

The need for a holistic approach

As the European Union regulatory environment becomes more complex – and regulations such as the General Data Protection Regulations (GDPR) come into force in May next year, more complexity will be added to the concept of data – in short, it highlights a growing need for a unified platform for financial firms with regulated users providing a single pane of glass into all of their communications and the benefits of automating the processes. For example, pending regulations state that capital markets firms must attest that data records have not been altered at any point in the capture or archiving process, and further, must remain tamper-proof for the duration of their retention. Firms are also required to have tighter control over enforcing their retention policies across all forms of communications, and further, ensure that they are not over-retaining data – something GDPR refers to – by having a defensible set of policies and procedures for deletion. Automation will be key in ensuring there is fast and easy access to records so that they remain compliant.

The increasing breadth and complexity of record-keeping and record-delivery guidelines has undoubtedly created market demand for flexible cloud-based platforms with analytics, search, policy guidelines and archiving of all data formats. Uniting the disparate interaction sources in a meaningful way will be crucial for firms going forward.

Ultimately, the ability to holistically manage communications data related to specific transactions from where the data originated to where it will be consumed will be a distinct competitive advantage for financial firms wanting to ensure they comply with regulatory requirements. Firms need to therefore consider implementing processes that will ensure safe keeping and easy access to their data.