Daily data tasks are “52 pick-up” for asset managers and hedge funds
-Kumar Metlapalli, Founder & CEO Kuberre Systems
March 4, 2021
If you have an older brother or sister, you were likely introduced to the game “52 pick-up” as a child. If you never had the pleasure, then consider yourself lucky because agreeing to play led to your sibling throwing a full deck of playing cards in the air so you could “pick them all up”. Once we became victims of this cruel childhood trap, we would quickly pass it along to others who weren’t in on the joke. Eventually, everyone would come to learn what “52 pick-up” was all about and could therefore avoid the trap going forward.
Today’s asset managers are playing their own version of 52 pick-up every day because their data management infrastructures require them to. Rather than walking into the office to find a full deck of playing cards strewn across the floor… they find data feeds didn’t get delivered, jobs didn’t run properly, new securities were added, identifiers aren’t mapping correctly across vendors, changes were out of tolerance, etc. It didn’t take us too long as kids to avoid getting trapped into a game of 52 pick-up so why can’t we seem to avoid the data equivalent of this cruel childhood torture?
Why do we continue the cycle?
We have all been led to believe that these issues are just part of doing business. Like opening the store in the morning, restocking the shelves and making sure there is enough change in the cash register… we have come to view data operations tasks as a necessary evil. How did we get stuck in that mode of thinking? We have automated so many tasks, built incredibly sophisticated models and made massive investments in trading technologies. How did we overlook this low value yet time intensive issue? Perhaps it is time to reclaim that time, effort and lost morale as we begin a fresh new year.
What’s the real cost?
Believe it or not, the costs really do start to add up quickly. The same folks we look to for adding new feeds, creating new reports or even writing our next “alpha” discovery models are performing housekeeping tasks each day before they can get to their real work. It is our experience that data engineering and/or data science teams are leveraging resources that cost between $75.00 and $150.00 per hour to address these challenges. On average it takes 2 people a couple hours each morning to ensure their data is prepared to support the firm’s daily activities. That means firms are losing approximately 80 hours per month and as much as $140,000 per year just cleaning up data issues that should not be a burden.
What can be feasibly done to stop our endless game of 52 pick-up?
There are a few areas of low hanging fruit that can be leveraged to realize some immediate benefit. First, find a way to outsource management of security master mapping exercises with a trusted 3rd party. While new securities are being added all the time, it isn’t rocket science and your firm isn’t the only one with the need. We have been applying a common model for our customers for years that allows everyone to receive value from the mappings done to date. Matching securities with company profiles, with SEDOL, CUSIP, ISN, Tickers, GVKey’s, FIGI, LEI’s custom identifiers and data feeds should not be a task that expensive resources should spend time managing. Next, all feeds and processes should be managed through a single view across the organization to eliminate wasted time, anomalies and the risk of overlooking something important. Finally, you should have vendor technology that allows you to add new data sets, feeds, or other changes without drama.
As with security master issues, you aren’t the first and won’t be the last to add the new feed so why should it bring new pain to the team? Modern data management platforms allow for onboarding new data with little need for manual intervention but fall short of solving this critical problem. We recently made the decision to carve out our "mapping as a service” (called X-Ref PRO) from Kuberre EDM so it can be integrated with Clients’ existing infrastructures easily, as they need something to close this expensive and bothersome gap.
Why bother? Isn’t this just a cost of doing business?
Right now, this is a cost of doing business… but it carries the risks of lost morale, errors based on manual processes and delays in realizing the value the data can create. When people are asked to perform what they consider to be “low-value” tasks on a consistent basis, it has a direct impact on the morale of the team. Ultimately, extended exposure to low-value work drives employees to look for better circumstances. Errors in data can delay or interrupt trading/modeling activities and manual processes could result in lost opportunity. With such small margins in performance separating the top asset managers from each other, isn’t it wise to put your people, money and resources toward ending 52 pick-up once and for all?
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