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Seeing Further in Financial Markets
Large financial institutions have thousands of subsidiaries, issue thousands of securities, and are tightly interconnected to other market players through millions of transactions and parallel relationships. Banks, hedge funds, asset managers and others must navigate these interconnections on a daily basis. Problems in one institution can quickly transmit throughout the financial system, impacting any number of other institutions in their wake.
Corporate level information and tools are readily available to analyze companies and markets. But much of the risk and opportunity stems from relationships within and across companies that are far more difficult to understand. For instance:
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Financial counterparties frequently transact through multiple entities and complex chains of relationships. |
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Large groups may have multiple issuers and guarantors, as well as cross-company receivables and payables. |
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Complex transaction can conceal critical ownership, counterparty risk and off-balance sheet exposure. |
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Intercompany lending and joint ventures can mask hidden assets and liabilities as well as conflicts of interest. |
Traditional methods of representing corporate relationship and transaction data fall short in their ability to analyze the complex world of corporate interaction. Much of this process is largely or semi-automated. Data must be integrated from disperate silos and complex network relationships must be forced into hierarchical structures. Along the way, errors are introduced and nuances are lost.
To see further in financial markets, we need better tools.
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