At a media roundtable, Sam Riley, head of Clearstream Securities Services, and Jens Hachmeister, head of issuer services and new digital markets at Clearstream talked about the steps necessary to deliver data products that clients, and the market, needs.
When developing data products for clients, and in order to really excel at data products, some preparatory work must be done, Hachmeister said, particularly around data governance. “One of the main things we have created is the common data layer”, Hachmeister said, which allows for the ability to ‘stick’ data together and provide value to clients.
Adding value to the market is key when it comes to data products, Hachmeister said, and the firm has focused on the collateral space and settlements, areas where it thinks it can add value through the use of data, and its subsequent use within artificial intelligence natural language applications which can improve transparency and access to holdings or information around collateral management, as well as turnaround time when it comes to decision-making.
Looking at settlements, Clearstream has developed a settlement prediction tool, which offers enhanced settlement information capabilities, Hachmeister said. Likening it to using Google Maps, Hachmeister said the tool gives an indication of where you might end up with your settlement, whether you may be short or whether you are spot on.
Despite the “significant” pipeline of data products, the firm prioritises their release based on market demand and wider adoption.
Internally, the firm has also introduced tools that allows its team to analyse real-time data via dashboards, allowing them to be more “forward-thinking”, Riley said, in terms of new products and changes to existing products, as well as managing clients’ needs more effectively.
In terms of collateral management, this may mean noticing inefficiencies on the client side, Riley noted, leading to a quick phone call to the client to remedy the problem. “That value-add is really important.”
“There is a balance between products that are value-add versus products that are marketable,” Riley said. “They are not just in addition to settlement, asset servicing, they are actually something that you can sell in their own right. We are growing, we are developing, and learning as we go.”
Looking at D7, the firm’s digital post-trade platform, and digital issuance, Riley said that all the data elements in the smart contract are there at the start when the security is issued.
“If you look at traditional issuance, you get a prospectus that’s in paper or PDF format and there are five to eight data points that you need to put on your system to settle a transaction. There are multiple other data points which are usable and in the case of funds, there may be around 400 data elements,” Riley said.
Riley noted that when it comes to raw data, there are some data elements that are not being provided through a data feed. “The reality is there is more data in a prospectus that could also be sent via an API or otherwise. I think that’s becoming an area where, certainly from an efficiency perspective and a scaling perspective, if you can automate, you create capacity.”
That is where work has to be done with algorithms, with analysis, as data pools become bigger. Reflecting on the work done with data analysts on the predictive settlement solution, Riley noted that most analysts prefer to work with as much data as possible. “We literally have 14 years of data accessible.” But the reality is most applications only need the last one-and-a-half years. “I think we need to be continuously looking at how we can offer ‘predictive performance’ data products through a combination of data sets, that when brought together you see something quite different, rather than delivering one data set.”
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