Enterprise Data Management
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Business Semantics Repository Aims for Data Precision
March 16, 2009
While financial firms have long known that accurate data is integral to efficient operations, concerns about risk have brought increased attention to the way they process, analyze and store transactions. Spending millions of dollars on technology infrastructure projects, however, will not be enough.
"Precise business semantics is the foundation of effective data management," says Michael Atkin, managing director of the Enterprise Data Management (EDM) Council. For that reason, the EDM Council, a New York-based trade group that promotes enterprisewide data governance in the financial services industry, has created a business semantics repository to give firms a common data model and dictionary for the information in their securities master files.
The goal of the initiative is to "avoid the problem of common terms that have different meanings, common meanings that use different terms and vague definitions that don't capture critical nuances," explains Atkin. About 200 fund managers, brokerages, banks and data vendors including Bank of New York Mellon Corp., BlackRock, Legg Mason, Merrill Lynch & Co. and Thomson Reuters are working to validate the Web-based repository's conceptual model and attribute definitions--an effort expected to be finished next month.
The repository, which initially will cover reference data before moving onto corporate actions, real-time and end-of-day pricing, analytical information and over-the-counter derivatives, represents a growing movement: More and more financial institutions are beginning to look at the cleansing and maintenance of data as not only an IT task, but also a business activity.
Currently, most firms store data from dozens of internal applications, third-party vendors and counterparties in a number of disconnected databases. If the databases do not share identical names and definitions, comparing information becomes a tough task.
"Firms will have problems automating business processes for better straight-through processing and will have difficulties in exchanging data and instructions with counterparties," says Michael Bennett, founder and director of Hypercube, a London-based consultancy that specializes in data modeling and designed the repository. "They will find it hard to feed analytical models and calculation engines, create consistent benchmarks for meeting the terms of investment agreements and do cross-asset risk analysis."
The semantics repository will help institutions with internal mapping, provide data vendors with a standard language and offer a set of tags that can be used to markup data at its point of origination, according to Atkin. "Data precision drives every trade, client interaction and business process," he says. "Imprecise data semantics leads to excessive mapping and unnecessary manual reconciliation."
While most of the executives working on the repository are data architects and technology professionals, a growing number from the middle and back offices--responsible for recordkeeping, clearance and settlement services--are participating in the weekly conference calls that Bennett hosts on behalf of the EDM Council.
"The semantics model is aimed at business-level executives," says Bennett. "It captures the attributes of a financial instrument at the level they need rather than having technical experts determine it. We wanted to come up with a format that can be validated entirely by business subject matter experts. Business folks have been using spreadsheets for the majority of their requirements and semantics."
English OWL
The repository is based on the Web ontology language, or OWL, which is used to describe the classes--and their interrelations--in Web documents and applications. "We're putting the concepts of OWL into English-friendly terms," says Bennett. "The rows and columns correspond directly to the features of OWL. It is capable of defining real kinds of things in any subject area and capturing facts about those things. However, it does not yet provide a suitably business-friendly view."
