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2 MIN READ
INVESTMENT OPERATIONS    DATA MANAGEMENT

What’s in Your Security Master File?

What’s in Your Security Master File?

INVESTMENT OPERATIONSDATA MANAGEMENT

Accurate data is the foundation for managing your company’s investment portfolio, which begs the question: Is your security master file set up to give you the most accurate data?

To answer that question, it’s important to review how your security master was built and maintained.

A complete security master file incorporates security characteristics and reference data from leading providers. There are many reputable financial data sources that provide investment characteristics such as pricing, credit ratings, factors, and sector data.

Multiple sources should be used to verify your security characteristics when your security master file is set up. Using only a single data source puts you at risk for incomplete, inaccurate, and stale security master information. When you have a comparison of values and research discrepancies, you are more likely to have accurate and audit-quality investment data. Multiple sources also allow you to fill in gaps in a particular vendor’s data set.

Terms and conditions are an important component of the security master file. Because terms and conditions are the same for a security, regardless of the owner, Clearwater stores terms and conditions information in a universal security master for all clients. That information is matched to individual securities in a client’s portfolio. A universal security master for all clients ensures all clients benefit when a data discrepancy is identified. In addition, Clearwater is able to efficiently validate data by having a dedicated data team that focuses on the quality of the security master data set.

Another challenge that reporting systems face is that different systems use different security masters.  Clearwater centralizes the security master file so that all reporting is based on a single version of the security master, ensuring consistency of data across reporting, be it accounting, performance or risk.

Some providers manually create the security master file for each client, which comes with the risk of human error. Clearwater uses a universal security master as part of its automated data management and investment accounting solution, ensuring that it’s done the right way for everyone, while allowing clients to configure it to their needs in the right places.

When a security master file is set up, it’s also important to ask how the data is processed. If that process is manual entry, that can increase time and effort and once again create the possibility of human error. Automation eliminates manual entry and allows investment and accounting teams to focus on more strategic initiatives.

A fully formed, extensively analyzed data profile is an essential building block for core accounting and reporting needs, which is why it’s important to know the components that make up a security master file.

 

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