Improve transparency and efficiency by digitalizing and automating regulatory activities.
Partner with Hitachi Vantara to build a data lake and analytics platform in the cloud.
Ability to report rapidly on the market impact of COVID-19.
Better market insights with more transparency and real-time reporting.
Greater agility to launch new capabilities faster.
Improved efficiency through increased automation.
Challenge: Extracting Greater Value From Securities Data
From the water we drink to the roads we drive on, two-thirds of the essential infrastructure we rely on in the US has been funded by municipal bonds. With $442 billion in new municipal securities issued every year and 39,000 trades every day, it’s a vital and thriving market.
The MSRB (Municipal Securities Rulemaking Board) is responsible for protecting securities investors, issuers and the public interest. Created in 1975, the MSRB regulates how bonds are bought, sold and traded.
To stay ahead in the fast-paced financial sector, the MSRB needs to be agile so it can anticipate and innovate as the market evolves. "We need to digitize and automate our market regulation, market structure and market transparency functions so we can move faster and maximize efficiency," explains the MSRB's Chief Operating Officer, Mark Kim.
Like many organizations across the globe, the MSRB is in the midst of an enterprise-wide IT migration to the cloud. The aim of the project is to eliminate the constraints of its existing datacenters and extract greater value from its market data, which is often complex and unstructured.
For example, each year the MSRB receives thousands of financial disclosure documents provided by bond issuers every time a deal is brought to market. Each document contains hundreds of pages in no fixed format and extracting this vital information is difficult and time-consuming. "To promote transparency, improve efficiency and provide a single source of truth for the market, we needed to make it easier to get at the data that was locked within our documents," comments Kim.
Solution: Cloud-Based Data Lake and Analytics Platform
As part of its cloud migration, the MSRB partnered with Hitachi Vantara. The two organizations embarked on a 12-week proof of concept (POC) exercise to build a composable data lake and analytics platform in the cloud. "We chose to partner with Hitachi because of its cloud-first and agile approach to software development," comments Kim.
Built in the Amazon Web Services (AWS) cloud, the solution combines cloud data lake modernization services, Apache natural language processing for data extraction, knowledge graphs and a search portal. The platform provides a centralized repository for both structured and unstructured files, including raw financial disclosure documents. Using its sophisticated analytics tools, the solution performs analytics directly on the data to provide insights in real time.
"The platform is adaptable, scalable and automated so it can grow with us. It's built on lots of different components but not locked into any one technology," says Kim. "The data lake includes blueprints that enable us to take advantage of open source technologies, AWS services and Hitachi Vantara solutions as our needs evolve."
The platform is also extremely secure to protect sensitive data, including at-rest and in-transit encryption and highly secure authentication and authorization.
Leveraging AWS AI and machine learning tools, the team fed in thousands of financial disclosure documents to train the solution to identify key data with a high rate of accuracy. As a result, the MSRB was able to develop an advanced search algorithm enabling users to find relevant information more quickly and efficiently using natural language processing.
Working with Hitachi Vantara helped the organization maximize agility, as Kim explains, "Working in two week sprints, the Hitachi team was able to deliver and demonstrate value throughout the engagement and respond to rapidly changing market conditions, such as COVID-19."
Outcome: Providing In-Depth Insights With Greater Efficiency
The MSRB now has a next-generation data lake and analytics platform that will enable it to embrace a data-driven future. "With the ability to analyze both structured and unstructured data, we can provide greater transparency to the market," says Kim. "The platform also provides us with the agility to launch new initiatives and uncover deeper insights faster than ever before."
For example, when COVID-19 struck, the MSRB was able to quickly quantify the number of disclosures being made by issuers that referenced the economic impacts of the pandemic on operations and finances. Many state and local governments have projected that the widespread business closures and the resultant job losses may cause revenue shortfalls in sales and income tax receipts, which are primary sources of revenue to repay bonds. In the event of an incident that impacts the ability of issuers to make timely payments of principal or interest on a bond, they must file an event notice to the MSRB within 10 business days. With over 50,000 event notices filed in the first quarter of 2020, the MSRB was eager to identify which of these disclosures referenced COVID-19.
Over the course of one long weekend, the team uploaded all the event notices, which were unstructured PDFs, to the data lake and analyzed them. It revealed that a total of 4,500 event notices referenced COVID-19, which was significantly more than was previously identified. "Thanks to the project with Hitachi Vantara, we were able to quantify the number and type of COVID-19 disclosures in real time and help the market establish a standard for future COVID-19 reporting," confirms Kim.
By leveraging AI, machine learning and sophisticated analytics within its cloud data lake, the MSRB will be able to continue to provide the market with greater transparency and vital insights as it grows and evolves.
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