Opening Cross: Making a Clean Break

Breaking off from Intercontinental Exchange may genuinely offer a new start for the Interactive Data Managed Solutions business—just as a clean break has for other recent examples.


Sometimes, parting ways is inevitable. Often, it’s unforeseen. Other times, observers claim to have seen the writing on the wall for an age. But either way, when the time comes, it’s best to keep your cool, not look back, and move forward (and, of course, keep the ring!).

This week, IMD has learned that Intercontinental Exchange is looking to divest the Managed Solutions division (formerly IS.Teledata) of Interactive Data, which it acquired last year from private equity firms Warburg Pincus and Silver Lake Partners.

It’s not known who will buy the business, though sources suspect this would be another vendor with synergistic assets, rather than a private equity deal or management buyout. Sources spoken to by IMD say they aren’t surprised, adding that the Interactive Data Managed Solutions business was not a good fit for the data division that ICE is trying to create—including the other divisions of Interactive Data, plus SuperDerivatives and the pricing business acquired by S&P Capital IQ, all of which points to the exchange being able to match its on-exchange data with comprehensive OTC pricing services. One source even says Interactive Data itself had tried to sell the business several years ago, prior to acquisition by ICE.

While this may have employees and perhaps customers worried, if past history is anything to go by, the IDMS staff can be positive about this development. ICE’s purchase of NYSE Euronext was really a land-grab for the Liffe derivatives market. Once that was safely integrated, ICE could spin off the Euronext exchange business. However, far from being seen as a cast-off, Euronext is flourishing under a pared-down structure that allows it to be more agile about handling its data.

In IDMS’ case, while there were synergies between its client base and that of other parts of Interactive Data, trying to leverage these may have been like trying to force a round peg to fit into a square hole. Also, this was a business that by all accounts was gradually declining (the jewel in the crown of the Interactive Data acquisition was its Pricing and Reference Data division, which accounted for 70 percent of revenues, according to the last publicly filed annual report, covering full-year 2012), and may respond better to a smaller, more agile structure.

Someone else responding better after making a break is National Australia Bank’s NAB Asset Servicing division, which has replaced five separate systems for portfolio performance measurement analytics with StatPro’s cloud-based Revolution platform and its new Revolution Performance module. After investing significant time and money in an unnamed vendor platform that only onboarded four clients (while two clients actually left the firm because this platform couldn’t deliver sufficient performance risk capabilities), NAB cut its losses, scrapped the old platform and turned to StatPro, which took six months to get up and running. After making the break and finding a new “Mr. Right,” NAB seems a lot happier.

So, one would assume, are all the sales, support and engineering professionals that made a break with their previous employers to join Ottawa-based hardware messaging platform vendor Solace Systems, which has hired some 40 staff over the past few months, many of them with direct experience in the capital markets. Such activity isn’t routine hiring, even for a company that just found its own Mr. Right in the form of private equity firm Bridge Growth Partners, which took a majority stake in Solace earlier this year (IMD, April 8), so I wouldn’t be surprised to see more significant news from the vendor in the coming months.

We’ll also be watching the ICE-IDMS process carefully. Unlike in life, a business break-up can’t always be subject to blame: who do you blame if something turns out to not be a strategic fit—especially if it came bundled with something else that was the prime objective? Often, the one who ends a relationship is considered the bad guy. But there’s no bad guy here—just companies with the smarts to see something wasn’t working, and to do something about it.

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