GoldenSource focuses on derivatives for buy-side initiative. GoldenSource, the New York-based provider of enterprise data management (EDM) technology and services, unveiled GoldenSource for Derivatives, a new service developed to help buy and sell-side firms accurately value portfolios and manage the risks commonly associated with derivative products including CDSs, CDOs, and a variety of other swaps.

GoldenSource for Derivatives is not a risk management application per se - it consists of a data management tool designed to assist users in creating a golden copy of all derivatives reference and counterparty data - essentially it scrubs and orders the data feeding firms' risk systems so that the risk numbers produced are more accurate and therefore more reliable.

According to Neil Edelstein, GoldenSource for Derivatives was developed based on client feedback from advisory meetings and a study conducted by the A-Team Group (Buy-side firms take a hard look at data practices), where it became apparent that buy-side firms did not fully understand how to go about valuing portfolios containing derivatives. "Around the time that the credit crunch became an issue we started to look into possible causes and the way that data plays a part in terms of transparency," Edelstein says. "Shortly thereafter we met with our customer advisory group, which we split in to the buy and sell sides for the first time, and from those six buy-side clients we quickly realised that the storing and managing of derivatives - especially the toxic mortgage stuff - was not understood."

GoldenSource's business focuses on providing industry participants with a single, enterprise-wide repository for all security types and attributes, but a common complaint voiced by clients was their inability to adequately house derivatives within their standard securities masters due to their special qualities and related counterparty information. "We realised that derivatives were the number one priority on their list in terms of breaking their central data management initiatives - there was no speciality application for derivatives and clients had to create separate databases in which to store their derivatives data, which goes against the nature of centralised database platforms," Edelstein says.

Bottom line: New offering likely to prove popular with GoldenSource's existing buy-side clients as derivatives challenges continue.