Big Data, Big Technology, Big Opportunities – sneak peek

Data-driven decision making creates competitive advantage, and from short-term pricing advantages to balance sheet optimisation, opportunities to leverage Repo big data abound. Having data isn’t enough, it is the ability to turn it into usable market intelligence and act on it that is the key to success.

Traditional static data is increasing being supplemented by asset class differentiation data, such as ESG data, and dynamic data such as pricing, valuation and position data. One of the points of friction for Repo markets is the balancing act between the need for granularity versus harmonisation, and the needs to reconcile data between the two. This, and the complexity of repo data, makes it difficult to work with.

When it comes to how repo market participants desire data, it’s a bespoke market with little to no standardisation as each player seeks to use data in their own way. One exciting example of ‘the power of data’ is the use of dynamic data to create theoretical repo yield curves and inefficiencies in market and collateral pricing. This market intelligence can generate trading opportunities and collateral optimisation at the individual security level.

At the strategic level, Basel IV will drive people even further towards balance sheet optimisation and the reduction of RWA. A data driven response to improve efficiency and optimal balance sheet will be imperative.

Euroclear, as an integrated part of the repo ecosystem acquires considerable quantities of data on a continuous basis and provides value-added services like simulation and optimisation. Beyond that, Euroclear can also provide large bespoke datasets for clients to conduct their own analysis.

Big data may be heading towards harmonisation in the repo market, solving the perennial challenges of data coverage and consistency. This, in turn, will create diverse opportunities, from short-term pricing to long-term efficiencies.