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The reference data utility aims to cut costs for banks

Goldman Sachs, JP Morgan and Morgan Stanley are building a reference data utility with SmartStream, which they say will provide data normalisation and validation for all asset classes. The project aims to reduce costs for consumers of data in capital markets by economies of scale.

Known informally as the Securities Product Reference Data (SPReD), the new platform will provide auditable data collection, cleansing and change management, based on a common standard. The idea is to create a master database. Using best practices from the industry, the utility should help to boost efficiency and cut out unnecessary costs, for example costs arising from two of the participant banks duplicating the same task.

“The new Reference Data Utility is at the forefront of what really is an evolution in the industry with the achievement of processing mutualisation, the reduction in operational risk and an increase in service quality within the reference data management domain,” said Philippe Chambadal, chief executive of SmartStream. “Our three bank members have embraced the utility model to ensure that the duplication of effort is minimised when addressing common market issues such as inconsistent data in regulatory reporting, costly trade breaks, and risk management.”

The Reference Data Utility will use SmartStream’s data management service, which has been running for five years. It was chosen for its auditing capabilities, its market coverage and its ability to support customer-defined sourcing.

“This is a great example of how our industry can partner to improve effectiveness and reduce costs,” said James Trait, managing director at JPMorgan Chase. “This utility will greatly improve the quality, timeliness and consistency of reference data used across our firm to better serve our clients.”

“With the growing challenges around regulation, risk management and product diversity, working together to ensure high-quality reference data is in everyone’s best interest,” added Eric Suss, head of Institutional Reference Data at Morgan Stanley.

The SmartStream Reference Data Utility operates 24/7 from New York, London, Bristol, San Jose, Mumbai and Bangalore, and covers global listed equities, derivatives, fixed income and structured products totalling 20 million securities.