Technology and the Trade Lifecycle: Where We’re Going

Yesterday’s technology has failed to provide an architecture robust and flexible enough to power today’s trade lifecycle. As regulation continues to increase and trading continues to become faster and more complex, new solutions are needed.

In part one of this series, we discussed the history of trading technology and how a changing modern financial market is outpacing legacy systems. As we wrap up the series, we will look at the role of a trade data hub in building a modern trade architecture, and steps required to build one with MarkLogic’s Operational Data Hub pattern.

The Link between Technology, Savings and Revenue

A more integrated trade architecture improves trade lifecycle efficiency, reduces cost and unlocks revenue-generating insights. Breaking down data silos and harmonizing data from different systems drives trading innovation and can make a trade architecture more effective when dealing with compliance issues.

An optimized trade lifecycle benefits operations by reducing exceptions and manual interventions. Financial services institutions with optimal trade architectures perform better, with per-trade costs that are 45 percent to 75 percent below average.

Most importantly, we know that a well-designed trade architecture reduces capital requirements, lowers IT expenditures and accelerates time-to-market for new financial products. A better architecture boosts financial performance and increases revenue. The best data solution for a modern trade architecture is the Operational Data Hub (ODH).

What Is an Operational Data Hub?

An ODH is an enterprise architecture pattern that unifies existing systems and breaks down data silos in order to provide a single source of data authority for an entire organization. This requires a shift away from the traditional relational database technology so a flexible data model can manage all data types without limitations.

To support tomorrow’s trade architecture, the ODH harmonizes data sources across the enterprise, providing four key functions.

1. Ingest data from upstream systems.
2. Provide a solid trust model to govern your data.
3. Harmonize data into consistent, usable formats.
4. Serve as a single point to serve data to all of a firm’s systems.

An ODH increases data accessibility by removing barriers caused by different data formats, inconsistent records, legacy systems and data silos.

The ODH and the Trade Lifecycle

When an ODH is used to manage the trade lifecycle, it effectively becomes a trade data hub. Its modern architecture drives operational efficiency through better data harmonization, integration and lineage, resulting in faster and more accurate trade event reconstruction and reconciliation. Improved access to higher-quality data enables advanced analytics and predictive technology, driving opportunities for more effective sales, trading and risk management.

With better trade execution transparency, thanks to harmonized data and greater data accessibility, the ODH is a critical element in regulatory compliance. This accessibility brings an agility that yesterday’s trade architecture is unable to provide.

The MarkLogic^®  Trade Data Hub

MarkLogic provides a NoSQL multi-model ODH solution that meets the needs of a more modern trade architecture by improving the interoperability of your existing IT investments. A superior trading architecture requires flexibility, singularity and availability, as we discussed in the first part of this series. Let’s explore why MarkLogic is such a good solution for a trade architecture.

By breaking down data silos and providing a single source of knowledge, MarkLogic focuses on the creation of trusted data views that encompass all enterprise data around distinct entities, such as trading parties and financial instruments. Achieving this level of singularity often requires the integration and harmonization of different, highly complex data models, which is a challenge when using relational database technology and ETL processes.

MarkLogic Semantics provides the native storage of powerful relationships between records, data and metadata creating maximum flexibility in how data is used. When semantic technology is combined with the ontological representation of data, it enables both people and machines to more rapidly understand and make decisions, improving trading strategy and execution.

Finally, MarkLogic is built for fast and reliable data availability, enabling downstream applications to deliver real-time information and insights. MarkLogic has an Ask Anything Universal Index for running lightning-fast search and query across the database, and also provides open standard APIs and other tools to enable fast application development.

The Future of Regulation

While today’s firms continue to react to data challenges with current regulations such as MiFID II, tomorrow’s firms face an increasing rate of new regulation. New regulation adds complexity and transparency to the trade lifecycle, which only increases costs. It is vital that the trade architecture of the future is ready for more and more compliance challenges.

Regulatory reporting is slow and painful when your data is separated into multiple silos, making it a challenge to capture the provenance and lineage data as it goes through the trade lifecycle. The MarkLogic ODH ensures traceability of all of your trade data across all of your systems by providing a single trusted source in the database. Universal data integration means that MarkLogic can report across all financial instruments and trade lifecycle data in real time. This includes all structured and unstructured data required to automate trade reconstruction. With MarkLogic’s singular trusted view, you are already prepared for future regulatory compliance challenges.

With more advanced security features and certifications than any other NoSQL database, MarkLogic is considered the most secure NoSQL database. It leverages modern security features to provide state-of-the-art data security, sharing, provenance and retention. In financial services, advanced data security is “table stakes” and is why the largest financial institutions ultimately choose MarkLogic for mission-critical trade applications.

The Future Is Here

For top-tier global investment banks and asset managers, MarkLogic’s multi-model database is the right choice for optimizing trade lifecycles in order to improve operational agility and meet constantly evolving requirements for regulatory compliance.

One of those customers, Northern Trust, is a great example of how MarkLogic’s technology can be used to build a trade data hub for faster time to results with greater agility.

Northern Trust’s Digital Transformation

As one of the United States’ largest banks, Northern Trust underwent a digital transformation with the goal of increasing clients, employee engagement and financial outcomes.

After determining that a relational database wouldn’t meet the company’s digital transformation requirements, Northern Trust decided to implement MarkLogic backed by cloud technology. The company began working with MarkLogic to build a trade transaction hub and quickly realized its value as a flexible yet enterprise-ready platform. Today, MarkLogic is serving as the system of record for Northern Trust’s digital offerings.

Read more about Northern Trust’s MarkLogic solution.

Building a Trade Data Hub

A MarkLogic-backed trade data hub eliminates time-consuming upfront data modeling and new ETL processes associated with relational databases, resulting in long project timelines and spiraling costs. Because of these challenges, most organizations just build new silos for every new application. The more the data is duplicated, the more governance and security risks creep in.

Deploying a MarkLogic trade data hub is a process that revolutionizes the way your organization manages trade data. These nine steps ensure that no data is left behind, which brings more capabilities and power to consumers while ensuring the possibility of iterative future optimization.

1. Initial approach – First, figure out the goals of your implementation, from satisfying regulatory requirements to integrating siloed data.
2. Design the data architecture – Focus on core attributes, flexibility and reduced change control.
3. Create a technical Business Analyst (BA) role – This new BA role in your bank is crucial to the trade data hub’s success.
4. Integrate data silos – Utilize existing standards while managing validation and data quality issues.
5. Standard Reporting & Provenance – Deploy asynchronous processing and set up a supply chain of information.
6. Real-time reporting – Real-time demand and new regulation require new ways to manage and scale reporting, handled by your trade data hub.
7. Data quality controls – Quality testing ensures completeness of reports while avoiding duplication of data and logic.
8. Non-functional aspects – Your new technical BA negotiates with the business early to build a data lifecycle management plan.
9. Optimization – Optimize your trade data hub over time to build a canonical model and universal trading record.

Learn more about these nine steps in this presentation from MarkLogic’s Financial Services Solutions Architect, Chris Atkinson.

Get Ready for the Future Today

Make sure that your trade architecture is ready for tomorrow’s challenges. As the pace of the global financial system increases, you will not have time to deal with increasing regulatory compliance requirements, aging legacy systems and disconnected data silos.

Learn more about how MarkLogic has become the most trusted source for helping the largest financial organizations build trade data hubs.

If you would like to find out how we can help your organization build a trade data hub, please contact us by sending an email to tradedatahub@marklogic.com.