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What is a Security Master?
A security master is a database of all known securities
that a portfolio management or reporting system has
encountered in the course of operations. It is the "Universe
of Securities" that the system trades in.
A security master can be a simple as a very large text
or Excel file to a complete relational database with
multiple tables and advanced features such as the ability
to assign multiple classifications schemes to various
securities.
The security master contains all the securities that
a firm or system deals with and all the necessary fields
to perform calculations on that security.
For example, a typical, minimal Fixed Income Security
Master might have the following fields for each security:
- Primary Identifier (e.g. CUSIP)
- Secondary Identifier
- Name
- Description
- Asset Type
- Asset Sub Type
- Asset Category
- Sector
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- Sub Sector
- Issuer
- Issue Date
- PAR
- Maturity Date
- First Coupon Date
- Coupon
- Frequency
- Accrual Type
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Other security types, such as Futures and Commodities
have very different parameters.
Pricing information is NOT kept in a Security Master.
Security Master data is the intrinsic data to that security,
it is for the most part static data that changes infrequently.
Pricing data generally changes daily and so is typically
kept in a different set of tables.
Contrary to popular belief, the "Security
Master" is not handed down to us on stone tablets
from on high. A Security Master is as much a process
as it is a database.
There is no single, shrink wrapped, "Security
Master" that you can buy and just use and be done
with the ordeal. All Security Masters are unique to
a firm and are built through an iterative process as
the firm encounters new securities.
While the data for a given security is reasonably static,
the problem in managing the Security Master is that
the total number and variety of securities on the market.
Very few people have the resources to actually research
every security traded in the world, and even so, new
securities are generated every day. Keeping on top of
this can be quite difficult. This is particularly true
given that there is no single data source that has information
on every security. Thus one must typically have multiple
data sources for security information.
Having multiple data sources for securities leads to
the second major issue in maintaining a Security Master
file. That issue is identifying new securities that
come in to the system. Often times they may have unclear
identifiers, or identifiers that are from a different
scheme, e.g. ISIN vs CUSIP, or alternately the first
or second data sources you query, may return no information
on that identifier. Correctly identifying a new security
and then retrieving the correct information can be a
complex and time consuming tax. This is particularly
true for illiquid assets such as Limited Partnerships.
Most large investment institutions have an entire department
dedicated to correctly identifying assets and maintaining
their company's Security Master Database. Smaller firms
may not be able to afford to dedicate an entire department,
or even one person to this task. This is where SHG Services'
Security Master Service comes in. We provide you with
your own Security Master Department, at a fraction of
the cost of having it in house.
If you think you may need a Security Master, here are
Considerations
for Implementing a SMS.
Learn more about the SHG Security
Master Service
Learn about the features of our Security Master Service's
Frequently Asked
Questions about the SMS
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