As markets evolve and the complexity of financial instruments rise, more and more security types are being pegged against a benchmark rate. With this, the process of mastering a security is now coupled with mastering the underlying benchmark curve and further linking the applicable rate to the security.
To be able to master an underlying benchmark curve, security master systems must capture yields for various tenors and present the entire curve to the user. Since benchmark curves differ greatly from one another in various aspects, from how they are used to what the curve represents, funds have grown a need for a configurable data model that can be extended whenever required to help them navigate the challenges involved in mastering benchmark curves. These challenges include:
- Data Completeness: The benchmark curve being modelled as a reference entity is a collection of yields for different tenors, which should be modelled as separate reference entities of their own.
- Data Transparency: Benchmark curve data changes frequently, making it important to maintain latest yields as well as a complete audit history of when rates change.
- Data Quality: Funds must be able to source benchmark curve data from credible sources to allow for arbitration and also resolve exceptions pertaining to discrepancies within data received from multiple sources.
- Index Fallback: More and more funds are now faced with the issue of transitioning away from LIBOR and pegging their investments against another curve. With this, funds must possess the ability to easily navigate while changing the underlying benchmark curve.
- Data Volume: As funds grow, the amount of data required to be maintained increases exponentially, leading to the need to be able to easily ingest data and run complicated operations on top of it.
IVP Security & Reference Master, which is part of IVP’s award-winning suite of master data management solutions, possesses a configurable bi-temporal data model that allows asset managers to maintain and customize assets and reference entities as per their requirements through a user-friendly interface. It also has native capabilities to integrate with multiple data sources, along with the capability to prioritize within these sources on an individual attribute level. IVP Security and Reference Master comes equipped with a robust Task Manager module, stitching all working components together and reducing the need for manual intervention. This, combined with the ability to manage exceptions and control workflows, allows users to maintain and master benchmark data.