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What is a security master?

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What is it? 

A security master is software that combines bits and pieces of the best data about a financial instrument then stored in a database and made accessible to users and applications.

Who needs it?

Any company that requires data about financial instruments to make decisions, or sources data from two or more internal or external data producers:

  • Asset Managers
  • Hedge Funds
  • CTA's
  • Mutual Funds
  • Brokers
  • Third Party Administrators
  • Venture Capital
  • Debt resolution
  • Payment recovery
  • Custody Services
  • Insurance underwriting
  • Private Wealth Managers
  • Central Banks
  • Retail and Commercial Banks
  • Internet Banks
  • Credit Unions
  • Savings and Loan Associations
  • Investment Banks and Companies
  • Brokerage Firms
  • Insurance Companies
  • Blockchain and Cryptocurrency
  • Crowdfunding Platforms
  • Mobile Payments
  • Anti-Money Laundering
  • Insurance
  • Robo-Advising
  • Stock trading apps
  • Budgeting apps
  • Private Equity
  • Data Providers

Yup, there's a lot of companies, that require it, some of which may be mastering the data, and not actually know they're doing it 😉.

Why have it? 

Some say that it's for risk management reasons, others say it's for regulatory purposes, there's really no "right or wrong", from my perspective, if you have data from many data sources, and the quality of the characteristics vary, then you're a candidate for a security master.  

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What's else do they call this? 

Ages ago, in the pre-2000's, people used to call it a "Security Master File", and in fact many still call it a "SMF" even though the "file" part of it is long gone, anyhow these are a few synonyms:

  • Security Master File (SMF)
  • Enterprise Data Master
  • Historical Security Master
  • Reference Master

How it's used?

The data is aggregated, from many sources, into a standardized data model, in particular the reference data is mastered first, then once the entities, descriptors, identifiers, are all mastered, companies move into mastering prices, ratings, and other such data, that may vary between providers. 

What are the components? 

There are five primary logical components required:

  1. Data Adapters: These are small software artifacts that get data, in batch or stream, from a single data source, and are intelligent enough to extract any and all data needed
  2. Master Models: A standard data structure, that represents the expected attributes, for a given instrument, that is meaningful in the real-world, this shouldn't include any producer-specific attribute names. 
  3. Data Store: A place where, data that has been normalized, and sometimes even the raw data, is stored, such that it's resting in a form that is usable by consumers. 
  4. API: An intuitive interface, that allows one to ask for a given security, many securities, time period, particular country or currency or other attribute, and then get back the data needed. 
  5. Stewardship: Tools used to review bad data, re-shape it, quarantine it, search for it, really all of the "manual" operations that a DataOps person would need to do. 

What kinds of data is mastered? 

Financial instruments aren't the only things that are mastered, although this is the common theme across many data sources, here's a few:

  • Companies
  • Issuers
  • Issues
  • Composites
  • Listing
  • Geopolitical
  • Legal Entities
  • Brokers
  • Custodians
  • Indicators
  • Countries
  • Currencies
  • Corporate Bonds
  • ETFs
  • Mutual Funds
  • Loans
  • Strategies
  • Accounts
  • Executives
  • Merchants
  • Merchandise
  • Ratings
  • Terms and Conditions
  • Classifications
  • Counterparties
  • Corporate Actions
  • Indexes and Benchmarks

Who are the top data providers?

There's may data providers of reference data, thousands of sources, that come from trading systems, market data providers, software companies, regulatory bodies, custodians, etc. The ones I'll mention here, are the ones which I have seem compliment your financial instruments:

What are some off-the-shelf products? 

There's quite a few large companies that offer products that either are utility software or offer security mastering as a key feature in their product. 

What is Advanti's role?

We provide services to create a security master using 100% state of the art open source packages that significantly lower the total cost of ownership and give our customers complete control over their destiny.