Data quality
The performance of financial and energy firms can be heavily affected by the quality of the market data that they use. Poor quality data exposes many processes to many risks: trading, sales, risk management, back office. The recent crisis for example made clear that the role of credit rating agencies had been doubtful. Almost all securities related to sub-prime housing market loans proved to be extremely risky but ended up with a top rating.
The lack of reliable pricing and transparency is said to have significantly contributed to the financial industry not realizing, up until a pretty late stage, how bad things were. It is expected that market forces and regulatory change, such as increased requirements for real-time reporting to public agencies will create greater transparency.
Controlling the quality of market data that flows into the organisation, requires that firms need to adopt the proper validation and cleansing processes. The need for high-quality data puts a huge pressure on data vendors as well.
