Michael Shashoua: The Way of the World

North American and European data management services providers, like many in the financial technology space, have long sought to break into other regions such as South America, Asia-Pacific, and the Middle East and Africa, in particular the countries within these regions that are considered emerging markets.

Providers are finding that working with existing clients in North America and Europe, close to their home territories, who in turn have operations in these other regions, is a smoother way into such emerging markets. These clients want their providers to roll out the same services in those more faraway offices. Data management services provider Asset Control, under new CEO, Richard Petti, is taking this approach.

“They want to buy proven technology and a methodology that gives them the ability to transmit trust to their customers and show that they are a reliable bank because they have solutions and processes in place,” he says.

In markets including South Africa, the Ukraine and Turkey, Asset Control is finding new business with this viral method. But there is another dimension to spreading systems through clients.

When Asset Control has been brought into markets such as Brazil, it has been on the strength of an entire ecosystem of services, Petti says. Regulators and banking supervisors also need best-of-breed data systems, and end-user firms follow that lead—not just for compatibility, but for the example of what works best, according to Petti.

By pushing Fatca and the LEI, the US has been swimming against the global tide of how financial data is handled.

In the field of corporate actions services, another provider has found a similar path to reach new markets. As reported in August, SunGard XSP, once a smaller company that had been acquired by SunGard, found that the worldwide reach of its new parent came with an advantage similar to what Asset Control is encountering by serving global clients. SunGard XSP at that time had begun expansion in Singapore, rolling out its cloud-based XSPv5 service and software-as-a-service XSPrisa product there, as part of a broader drive in the Asia-Pacific region through SunGard’s middle- and back-office services footprints.

Ironic Detachment
Those who are counting on rollouts of services within the same major global firms to offices in other regions would hope that these would be seamless, like McCartney’s “getting better all the time” lyric without Lennon’s “couldn’t get much worse” counterpoint. But the latter might be an apt summation of the cross-border complications in the legal entity identifier (LEI) saga. As 2013 progressed, it became more evident that local operating units (LOUs) and pre-LEIs in different markets would each have differences that would need to be coordinated. In October, Thomson Reuters’ Tim Lind told a webcast audience that customers (the end-user firms) are having trouble understanding the interactions between LOUs and the central oversight organizations for the LEI based in Basel.

Similar inter-governmental fractures have surfaced with the US Foreign Account Tax Compliance Act (Fatca). Separate individual Intergovernmental Agreements (IGAs) have been made, and will have to be made between the US and other countries. Only a handful of these are in place to date, since many countries’ laws explicitly prohibit disclosure of financial information to foreign entities and governments. By pushing Fatca and the LEI, the US has been swimming against the global tide of how financial data is handled. 

Proceed with Caution
The “Western” regions of the industry—service providers and their clients alike—may need to proceed with caution on grand plans to impose different systems and methods on foreign markets. It’s possible that data systems that have worked well can yield improved data management elsewhere, but at the same time, it’s not impossible that idiosyncrasies of other markets could slow their adoption.