Tine Thoresen: Cashing In on Cooperation

I recently spoke to French bank Société Générale Securities Services Asset Servicing about how it is working to change the time clients receive daily valuations. The aim, they explained, is to send out valuation reports before 7 a.m. each morning instead of at the current time, which is before 10 a.m. By changing this process, Société Générale can give clients more time to evaluate risk. But to be able to succeed with a project like this, firms need to have their vendors on board. In the reference data world, it is increasingly common for the pressure to be on the vendors to be flexible and adapt to a rapidly changing market.

In the case of Société Générale, the firm has had to ask some of its data vendors to send the end-of-day or intra-day data files earlier than before—a change recognized as being complex to make for large data providers. Yet, in the years following the financial crisis, clients requesting changes such as these have typically experienced greater willingness from vendors to discuss new ideas. For some, it may seem like this is a brand new world. The current level of cooperation happening in the market would, for many, have been unheard of a few years back.

The Partnership Path
The number of announced partnerships seems to be on the rise. Change is happening fast, and vendors are working hard to improve services. Earlier this month, investment management software vendor SimCorp teamed up with enterprise data management software vendor AIM Software in a bid to offer improved data management capabilities to asset management firms using SimCorp’s Dimension platform. Copenhagen-based SimCorp recognized the growing demand for better data management functionality and decided to work with an existing vendor as opposed to developing that functionality in-house.

Earlier in the year, enterprise data management software vendor GoldenSource entered into a partnership with data management specialist Xenomorph, the upshot of which means that now GoldenSource is in a position to offer clients time-series data management capabilities. In both examples, the vendors were able to ensure quick time-to-market by opting for the partner route whenever there is a need for product development that sits outside their core area of business. It is all about being in a position to meet changing client requirements.

Both software vendors and data vendors appear to be exploring new business models to adopt more flexible strategies. The regulatory environment is expected to take this to the next level. Last year, data vendors started exploring ways to offer certain data items free of charge.

The trend toward increased openness was pioneered by counterparty data vendor Avox, which made 200,000 “skinny” counterparty data records freely available in June 2009; and Bloomberg, which in the same year started making Bloomberg codes publicly and freely available on the Bloomberg Symbology (BSYM) website.

With increased regulatory pressure and focus on risk mitigation, market participants now expect other vendors to follow suit—particularly in light of the planned setup of the data collection and analysis center, the Office of Financial Research (OFR), in the US. The OFR is expected to result in some reference data types being made available to the market in a utility. The question now is how this will affect the vendor community. Will basic reference data items be made freely available in the future?

No matter what happens, it is clear that both firms and vendors recognize the requirements for managing financial information are changing. It is often said that the key to success is the ability to adapt to change, and it is now up to market participants to prove that the reference data industry is up for the challenge.