Turning Regulatory Data into Alpha
There’s a silver lining in MiFID II’s requirement for asset managers maintaining data warehouses of their trades in that it helps firms find alpha easier, according to Alfred Eskandar, CEO of Portware.
A subset of data warehouse users has gone beyond using data warehouses for compliance and best execution confirmation to using the collected data to gain insight and drive trading strategies.
“Before, it was a take it or leave it. If you hit and offer for 500 IBM and only received a 50 fill, you would be pissed off but forget about it a week later,” he said. “This has a perfect memory, and there is nothing that it can forget.”
Portware has offered custom data-warehouse design and construction services to clients in the past; the vendor has included the service as a standard component of its Portware 6.4 release, which it announced on November 29.
The data warehouse can be hosted in client facilities or hosted by Portware in the facilities of data-center operator Equinix, according to Eskandar. “As part of the FactSet family, we get to leverage all of its global infrastructure.”
Eskandar estimates that a quarter of current clients using data warehouses from Portware are using them beyond meeting their regulatory requirements.
“It takes real commitment to utilize it that way,” he added. “People will see that there are other uses and they will slowly and surely keep adding use cases and adding data sets. What you put in is what you can get out.”
Over the years, Eskandar has seen clients put “everything and anything” into their data warehouses.
“We have folks who have been doing it for a while and have gotten really good at it,” he said. “They have a clear and specific purpose for what they want to discover. And then there are the other guys who are just getting into it and want to know how they can use it for other things.”
More on Electronic Trading:
- Meeder Preps New Portfolio Management System
- Order Routing Under the Microscope
- Horizon and Neo & Partners Global Collaborate in Asia to Create Innovative Trading Environment
How much off-exchange trading is too much?
Are big banks holding back advances in market structure?
R5 and Shanghai Clearing House form electronic market.
Kepler Cheuvreux sees granularity of data as a broker differentiator.
Challenges include illiquidity and fragmentation across borders.