How do you check the accuracy of your reference data?


Timely, reliable, and accurate municipal bond reference data is mission-critical for many essential functions in the municipal bond fixed income investment life cycle. This includes trade execution, risk management, pre-trade analytics, post-trade valuation and reporting, and regulatory compliance. Failure to accurately recognize, describe and categorize the features of a municipal bond can have serious downstream consequences for all of these functions, potentially delaying settlement, misvaluing NAVs for bond mutual funds, or misreporting the risk of a portfolio. Not only will this have a detrimental impact on investors, but it could also result in regulatory sanctions that tarnish the reputation of municipal bond investment firms.

It may come as a surprise then that most municipal bond investment firms, and those who serve them such as fund administrators, custodians, trust banks, and valuation & analytics firms, typically rely on a single vendor source for their reference data. There are a number of reasons for this – cost, historical legacy hard-wired systems, operational inertia, etc. – but the end result is that muni reference data can end up being wrong.

Luckily for them, hugely damaging public impact is relatively rare, but our research has revealed that mistakes in the data they are using are commonplace. Our conversations with the industry have revealed that, amongst other things, the timeliness of adding new issues is patchy, ratings and credit information can be incorrect or stale and corporate actions, such as redemptions and defaults are frequently missing or incomplete. Luck should have nothing to do with investment operations when such downstream damage is possible, and it seems that many firms are taking unacceptable risks with their muni reference data when mitigation strategies are entirely feasible.

The most obvious and easy way to check reference data accuracy is to use a second source as quality control. This is not infallible – nothing is – but by checking the primary source of the data against a second source (one completely independent of the primary vendor) differences in any of the data can be identified. These ‘exceptions’ raise a red flag that the data might be suspect and can then be investigated before creating downstream trouble. Investigation might require a deep dive into the features of the bond, possibly using official issue documents or statements.

The BondView Reference Data Service (RDS) for municipal bonds offers is ideal for this purpose. It offers comprehensive, high-quality reference data on over 1.5 million U.S. municipal bond issues from over 50,000 different issuers. This includes all the descriptive data, from basic to extensive security, that the majority of user applications require. The data is collected from public sources, fully independent of any of the main incumbent suppliers of muni data. The service can be used both to check for exceptions and facilitate a deep dive to investigate them.

For more information on the Reference Data Service, contact us at