Quality of Data Dominates Bond Market's Worries
In a recent survey by SIX, the importance of efficient and high-quality data in the fixed-income market has come to the forefront. The findings suggest that poor data quality continues to pose a persistent challenge in portfolio analysis, leading to misalignment with bespoke categorization.
According to the survey, over half of firms (56%) reported that their fixed-income data management processes are partially automated and seeking further improvement, while nearly a third (31%) have already achieved mature and largely automated workflows. This emphasis on automation is critical in improving fixed-income data management, as it addresses the longstanding issue of poor data quality.
However, the survey also underscores the need for a combination of automation and human data experts. Human data experts are key to providing customers with efficient and high-quality data solutions. Their expertise is essential in navigating the complexity of bond markets, which necessitates a strong focus on data that is reliable, transparent, and easy to integrate.
The complexity of bond markets also presents other challenges. Difficulties with data integration (47%) and a lack of transparency (34%) are identified as key pain points for fixed-income market participants. To address these issues, greater emphasis is needed on the automation of data extraction and data management processes.
When selecting data providers, firms prioritize breadth and depth of coverage, data transparency and auditability, and APIs as the most critical factors. With 53% preferring APIs as the method of data delivery, the survey highlights the importance of flexible and easy-to-use data delivery systems.
Swati Bhatia, head of fixed income at SIX, commented on the findings, stating that market participants are facing mounting pressure due to soaring data volumes and the demand for faster decision-making fundamentally reshaping the fixed-income market. The need for efficient and high-quality data solutions is crucial in maintaining portfolio valuations in the face of data quality issues.
In conclusion, the findings of the SIX survey underscore the need for a laser-like focus on automation and human data expertise to overcome the challenges in fixed-income markets. Reliable, transparent, and easily integrable data is crucial in navigating complex bond markets and ensuring accurate portfolio valuations.
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