LONDON–( BUSINESS WIRE )–SmartStream, a provider of Transaction Lifecycle Management solutions for the financial sector, today announced the results of a new survey conducted in partnership with Acuiti Management Intelligence. The report, entitled “The Future of Reference Data: From Compliance to Alpha,” highlights the growing role of investment in reference data for financial firms and the advances in data standardization and automation.
Respondents were surveyed across the derivatives market: hedge funds, proprietary trading firms, energy traders, bank and non-bank FCMs, and brokerage firms. The results show that firms have made significant investments or changes in the way they manage and process reference data for trade data management over the past five years, with automation emerging as a primary driver.
The main findings of the report:
– 71% of companies have invested in reference data in the last five years.
– Standardization of external data remains a major challenge, say 46% of respondents.
– 56% of respondents reported a significant reduction in manual processes through automation, with noticeable improvements in reconciliations and trading workflows.
– 24% of companies have fully automated their voting systems. However, this area remains challenging despite recent technological advances.
– AI adoption is gaining momentum. 25% of companies already use AI or machine learning for data management, and 30% plan to integrate these technologies soon.
Linda Coffman, EVP SmartStream RDS, explains: “Despite progress, challenges remain related to fragmentation and complexity – such as integrating data from different providers and resolving inconsistencies across external counterparties and exchanges. However, the introduction of AI is changing the way reference data is used and driving the development of more sophisticated applications across the entire trading lifecycle. This reflects a trend towards continuous investment in reference data, away from one-off major upgrades.”
“Reference data is now used well beyond the traditional use case of post-trade reconciliation,” said Ross Lancaster, Head of Research at Acuiti. “In today’s fast-moving market, firms are looking for competitive advantage and are increasingly using reference data to generate alpha and increase efficiency across the entire trade lifecycle.”
The report shows an increasing trend towards AI and machine learning. A quarter of companies are already actively using these technologies for reference data management, and almost a third have plans to do so. While the adoption of AI is still in its early stages, there is growing momentum in innovative applications of reference data. Although initial costs and hesitant approaches remain hurdles, these issues are likely to diminish with increased adoption, enabling broader use cases and efficiency gains across the financial sector.
