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Winners' Circle: The SmartStream Reference Data Utility (RDU)

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SmartStream’s Reference Data Utility (RDU), which came out top in two categories this year, is becoming ever-more compelling in the lead up to MiFID II. Inside Reference Data speaks to RDU CEO Peter Moss.

Where are you with SmartStream’s Reference Data Utility (RDU) now?

Peter Moss: We’re heavily focused on the Markets in Financial Instruments Directive II (MiFID II) and it is very much driving our agenda. The need for broader reference data is a key requirement for MiFID II compliance, and we’ve updated our offering to include more regulatory attributes. We’re now at the stage of locking down clients, and we’ve done integration testing with the first of them. We’re about as far forward as we can be without having the regulatory data from the European Securities and Markets Authority and the regulators. 

 

Peter Moss Smartstream RDU
Peter Moss, CEO, The Smartstream RDU

How do you think the RDU can assist clients in meeting MiFID II requirements? 

Our focus is on instrument reference data, and what sets MiFID apart from other regulation is the way it is implemented—the reference data component, in particular. To prepare for MiFID II, we’ve pulled together the necessary reference data to allow financial institutions to concentrate on core business, rather than sourcing and integrating it.  

 

How did you go about preparing the RDU for MiFID II?

We’ve been working very closely with a number of clients to define everything they need to comply with for MiFID II. We are focused on delivering cleansed and normalized reference data to clients, so we’re able to adapt as we’re having these conversations with users. We’ve had 40 to 50 conversations with systematic internalizers and other organizations, and each of these conversations contributes to the process. We’re learning, and evolving the solution as we continue the conversations with the industry, making the MiFID II offering an industry-led initiative.

 

What is the next step for SmartStream’s RDU in terms of gearing up for MiFID II?

Once we receive the data from the regulator in July, we will work with our customers to make sure regulatory data flows through, which will lead us into the industry test period where we will see volumes of data starting to grow.  The second part of the year will be about proving the data flows and working on modifications to optimize the system and ensure the flow of data works for all users. 

 

What are the plans for SmartStream’s RDU after MiFID II?

The next phase is to work with a range of data vendors to build a reference data security master for the industry, which will expand equities and fixed-income coverage. When making these enhancements, we will pay particular attention to corporate actions and timeliness of reference data, so that we can provide it for the start of the trading day. Having data at the start of the day before the market opens is key for trading firms, and that’s what we commit to [provide to] our clients.

 

When can the market expect to see the RDU offering broader content coverage?

We’ve enhanced our coverage with listed derivatives this year, which won us the Best Reference Data Initiative award. We built out listed derivatives first, as we feel it is the most difficult area for clients to handle. Starting our content expansion in a notoriously challenging area has allowed us to fill a gap in the reference data marketplace, allowing us to stand out and demonstrate what we can do.

We will also work on fixed income and equities. In the first half of 2018, we expect the global equities coverage to be complete, and in the second half we will have finished work on global fixed-income content. The question then becomes about filling in the broader range of instruments, such as indices, exchange-traded funds and loan-orientated products. 

 

What will the expansion mean for SmartStream’s RDU?

We’ve had a lot of interest from organizations that recognize the challenge of maintaining listed derivatives since we completed
the first expansion phase. There’s no doubt having a broad coverage of equities, fixed income and derivatives will open up the market in terms of customers we can talk to. The expanded coverage is a key part of the evolution for the RDU, and we will then have broad applicability to financial firms, both on the buy side and the sell side.

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