For over a decade, the EDM acronym has come to represent data quality, standardization, governance and management for firms that trade in the financial markets.
The term Master Data Management (MDM) represents the same things – quality, standardization, governance, management – applied to any critical data in any business domain, rather than just to the financial markets.
EDM, or Enterprise Data Management, is the capital markets term for MDM; MDM is the “generic term” for EDM. But, material differences in connotation have emerged for these terms. In common industry parlance, we’ve observed EDM to be associated with securities data and MDM with entity data.
How our industry arrived at these connotations is not surprising:
Firms that trade in the financial markets require information about the securities they are trading (terms/conditions, prices, corporate actions, and more). Other verticals such as health care or manufacturing don’t. Many financial services firms started their data management journey with the security master. Other verticals such as health care or manufacturing don’t require this. So, it is logical that securities mastering projects are associated with the EDM acronym.
Most verticals, including financial services, have data mastering requirements in the area of entity data (individuals, corporations and associated hierarchies, counterparties, and more), which is why the multi-industry generic MDM term came to be associated with such projects, even within financial services.
Is the distinction between EDM and MDM important? Should it continue to exist?
Both terms stand for the same principles and require the same underlying approaches to handling data, regardless of which data set is involved. Moreover, the data mastering requirements of financial institutions are crossing the boundaries between data sets, requiring a unified view of securities, entities, and other data sets for risk analysis, client analytics, and regulatory reporting (witness BCBS 239 as just one example).
GoldenSource crosses those boundaries too. We serve the role of EDM (if that’s what a security master means to you); we also serve the role of MDM (if that’s what a customer/counterparty/entity master means to you).
In a prior life, I was involved in creation of an application for traders which consolidated into one place the features typically associated with an OMS (Order Management System) and an EMS (Execution Management System). By putting the two together, we allowed our customers to simplify their environment and operate more efficiently. In a torturous merging of acronyms we called this an “OEMS.” This is now an accepted term in the industry.
Following the same logic, if EDM and MDM come together, does that become “MEDM?” We may be witnessing the dawn of a new acronym.
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