BEST OF KNOWLEDGE - JSE MAGAZINE

BEST OF KNOWLEDGE

Mark Randall, Head of the JSE’s Information Services division, on managing data and enhancing its benefits for clients

BEST OF KNOWLEDGE

Q: Where is the JSE’s data sourced from?
A: The JSE has a rich set of data, mastered in internal systems, that is captured in a number of ways, namely directly (reference data); direct outputs from the trading engine (live data); calculations by the JSE (non-live data); and calculations by our index partner FTSE Russell (index data).
Reference data relates to tradable instruments, sectors or participants, and this changes infrequently, whereas live data is consumed and presented in real time.
Non-live market data provides point-in-time such as end-of-day prices, interest rate curves
and volume/value/deals traded statistics, as well as analytics relevant to member rankings or top movers. Index data includes the constituents and weightings of each of the JSE indices.

Q: What are the restrictive considerations when managing information?
A: Privacy is the most important consideration,
largely because the JSE has access to private order, client and position data that cannot be distributed and where access must be carefully controlled to prevent breaches. We also have to give consideration to price-sensitive information that the JSE has access to prior to such being released into the market. Equity market trades are a good example of where privacy must be maintained, given they are undertaken anonymously.
Any corporate actions that listed companies undertake are also arranged internally with the exchange prior to finalisation and publication.
Employees working with this kind of sensitive information must abide by strict controls around internal and external non-disclosure.
Privacy is an area that the JSE takes exceptionally seriously, since any breach would have a severe impact on its integrity and reputation.

Q: How are data protection laws being absorbed into the JSE?
A: The [EU’s] General Data Protection Regulation is the most significant currently. This law is far-reaching and sets a high standard for companies in how they treat personal data. The JSE has a number of clients and stakeholders in the EU and therefore compliance is important to us.
Regulation responses cover a range of factors including policies, internal controls, business processes, client notifications and system enhancements, so we are undertaking a full review of the JSE’s existing data protection regime for all personal data – not just that relating to EU clients.
The actions that come out of this workstream will put the JSE in a good position to handle all personal data responsibly and in line with regulations and best practice.

Q: How is the value of data measured?
A: Data has no value in isolation and can only be measured in terms of how it is used, or its impact. In many cases, data can be seen as a basic utility that is a requirement to perform a business function.
For example, live prices are required for effective trading, and end-of-day prices are required for portfolio valuation and risk management. However, there is a world of insight beyond this where data is used to understand markets, drive business decisions, adjust business models and lead strategy.
One simple example is when there is a movement of assets from active managers to passive managers. Here it is critical to find an index provider that delivers quality index data products that are easy to consume, delivered on time and accurate Simultaneously, the IP embedded in such a product must support the passive investment business model, which requires applying good index methodology, regulatory compliance with benchmark regulations, and replicable, representative and investable traits.
Broadly speaking there are two key elements that provide a basis for value. The first emphasises that the technical aspects of the data are important inclusive of good file formats, on-time delivery, easy collection and consumption, and notifications on delays. Secondly the IP, which presents the thinking, and analytics behind data product design and how that relates to statistics, indices and market performance. Both aspects must be carefully developed and monitored to ensure relevance.

Q: What permissions should be granted to data accessors?
A: The data and information products the JSE provides are subject to a well-defined policy and licensing model that requires the sales team to understand how the data will be used by a client, to ensure that the correct licence is applied.
Considerations include whether data is to be published or re-distributed; whether the data is live, delayed or end-of-day; the number of professional and non-professional individuals seeing the data; the number of internal systems or applications using data; whether the data is to be used for non-display purposes such as risk management, index calculation, product pricing, and so on; and whether any IP inherent in the data will be used as part of the client’s business model.

Q: What is your vision for the Information Services division?
A: The division creates an opportunity for the exchange to expand across the value chain by creating new insights for clients, supporting new business models and, ultimately, diversifying group revenue. One of the key themes we will be looking to expand on includes enterprise data, which supports our trading platforms, post-trade business and client engagement models.
Information governance is also under the spotlight given regulatory pressures and the growing appreciation for the level of care that organisations are embracing, particularly with regard to personal data. We have a vision to continually review and modernise market data, and with the ITaC technology coming online, we now have the opportunity to expand on the top-quality market data that we are already supplying to equity markets to the FX derivative market.
Finally, indices and analytics, the latter of which is a large potential growth area for the JSE. I will devote much energy understanding how we can really dig into the wealth of data at our disposal to create meaningful insights for our clients that will enable them to more intimately understand the evolving markets we operate in.

By Kerry Dimmer
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