Storing data is nothing new for securities firms. In many operations, every action of every executive and staffer, from business transactions to phone calls to emails, is recorded and stored electronically. In the digital era, it's become common practice, a sign of good business management.
But, with the onslaught of high-profile media cases and new regulations handed down from the Securities and Exchange Commission and other government agencies, the issue is not keeping that data "somewhere."
The real issue is retrieving the data, when needed. From the cloud. From servers. From cassettes. Even from cabinets.
"With the regulatory and compliance initiatives coming up now increasingly, financial firms and a lot of corporations have the mindset that they have to keep everything and store it. However, when you do that, you're not necessarily thinking about how you're going to get it out later,'' said Katey Wood, an analyst who covers the process called e-discovery for research firm 451 Group. "You just want to make sure it's there if you need it."
For example, any time there's a lawsuit your securities firm is going to have to produce all of its relevant electronically-stored information that's related to the case. "There are really tight timeframes around that and tough sanctions if you don't comply with them," Wood says. "Therefore, companies want to be able to gather up their information quickly and determine what's relevant."
One of the biggest problems when it comes to data retrieval is precision, sifting through loads of different kinds of data in order to find information related to one single subject. The data may be in different formats, on tapes on shelves or "sitting loose" in a Microsoft SharePoint archive, online, Wood notes.
"That's one of the challenges of getting stuff out of an archive or compliance or regulatory system-figuring out what your goal is and getting through all these massive tons of data," explained Wood. "There are all of these different repositories in an archive in a corporation and a lot of times they aren't unified with some kind of search system."
Companies such as San Francisco-based enterprise infrastructure software provider Autonomy Zantaz have tried to address this issue and help firms improve their data retrieval process.
The biggest problem is unstructured data. This is information that doesn't exist in columns and rows in databases but rather in documents, emails and audio, "where the data itself is not described" digitally in a way that makes retrieval easy, said George Tziahanas, vice president of compliance at Autonomy Zantaz.
Banks, broker dealers and the like are under all types of requirements to save books, records and other operating information for a long time. But now, those requirements have been extended to include more and more electronic information such as email, instant messages, and even postings on social networks, under new guidance from the Financial Industry Regulatory Authority, explained Tziahanas.
"The question then becomes, 'Why are you storing this?'," he said. The answer is 'for very specific reasons,' such as the regulators wanting to look at it at some point, or because the firm is going to get hit with a lawsuit, which means the data will have to be produced. That gets to access technology, which gives you the ability to go in and access all kinds of information of different types in different places, understand what it is, what matters and produce it."
Using some mathematical algorithms and software tools, Autonomy Zantaz has been able to develop a technology that helps users understand exactly what the content they are filtering through is about-and once you know what you're looking at, then you can actually start utilizing the data, Tziahanas explained.
"If you don't understand what that information is, it's pretty tough to take the appropriate action, whether it's archive it, save it, get rid of it, etc.," he said.
Most of the largest banks in the world archive all of their messages of various types with Autonomy Zantaz, said Tziahanas. "On top of those archives, we put a supervision surveillance platform that executes policy that looks for specific types of things-complaints, rumors, inside information violations, etc.-- and it serves those up for reviewers and compliance officers to see if there are potential violations."
Over the last year, Autonomy Zantaz has spent a lot of time tying more investigative tools into its supervision platform because users have had to start asking new questions of the data much more quickly, he said.
One of the significant issues within Wall Street firms has to do with the way information has been managed within the firm, said Mary Knox, research director for Gartner Industry Advisory Service's banking and investment team.
"Typically, data and other information has resided within each of the business units associated with individual applications, which means it's been widely distributed. It's everywhere," Knox said.
Part of the issue with it being distributed in that fashion is that there has been no central control that is placed around it. "When you have no central control, it's not only that the information is not centrally located to be readily accessed, but there haven't been rules and standards about how information should be archived, how it should be documented," she said.
What Knox has been analyzing among Wall Street firms is a general move toward more centralized data and information management. "One of the things that has been helpful is the move to greater electronification," she explained.
When it comes to older information in many cases, there is still a lot of paper, spreadsheets, "but as things are moving to more centralized environments and being electronified with controls being put around it, this information becomes more readily accessible," she said.
The fact that companies acquire data from a variety of different places where a lot of people have touched, changed and adjusted the data also is a major challenge, said Rick Enfield, director of product management at Asset Control, a New York company that provides management software for reference and market data.
"The entire internal control process isn't as structured as it really needs to be," he said. "A lot of companies are really looking at their risk metrics and processes, which is requiring them to pull and access data across the organization in ways that have not received the focus they would have in the past. What's complicating a lot of this is lack of standards. As long as you don't have standards, these type of projects will be complicated."
Beyond the issue of data retrieval, continuing growth in the amount of data being created has become a major challenge facing firms, said Greg Olsen, director of business development at email and messaging infrastructure provider Sendmail.
Sendmail's Sentrion product is deployed at a site that will use content policies to make determinations as to what messages will be copied into an archive and send those messages to the archival system, according to the company. The other point of intersection is the use of search features in the archival system to update and improve the lexicons used to apply policy in the Sendmail Sentrion product.
"The additional requirement is the ability is to have very fine-grain control on who can see what in archives because there are many stakeholders in an organization that may need access to an archive but you may need to be able to control what a person in a given role in an organization can actually see," noted Olsen. "There are concerns in Europe around the expectation of privacy employees have when in those instances, there may be a case where actual identities must be protected from disclosure so content might be accessible but who sent it might not be."
This article was reprinted with permission from Securities Industry News.
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