Buy-Side Tech Vendors Focus on the Middle Office

A series of mergers and acquisitions between technology vendors means buy-side firms have more options in the middle office space.

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John takes a look at some of the more significant mergers and acquisitions among buy-side-focused technology vendors announced recently, where solutions for the middle office seem to be the flavor of the month.

In last month’s column, I wrote that as the global and financial landscapes evolve, some asset managers, particularly those in Europe, may find consolidation through merger the best way to steady the boat in an increasingly choppy sea. While deals between Standard Life and Aberdeen Asset Management, or Henderson Global Investors and Janus Capital are pushed through to bulk up their market share, resources and reach, the same goes for the technology vendors in this space that must be able to develop their solutions and services to match industry demand even as it continues to change. Acquisition is the most direct approach to achieving that goal.

Technology providers to the asset management community have never needed to be as responsive and intuitive to their clients’ needs as they do right now, and several among them have announced recent deals of their own worthy of a second look.

Performance Pressure

Over the better part of the last decade, Paris-based BISAM has built up a significant presence in the performance measurement and attribution space, as well as an impressive buy-side client roster, particularly in the long-only space, through its flagship performance, attribution, risk and reporting platform, B-One. The vendor’s record speaks for itself: nine consecutive wins in the best buy-side performance measurement and attribution product category at the Buy-Side Technology Awards. It’s little wonder, therefore, that BISAM was targeted for acquisition by big-spending data and analytics provider FactSet in late March, adding the vendor to recent deals it has closed for Portware, Vermilion Software and Cymba Technologies over the past 18 months.

FactSet’s focus on creating a single platform to support every aspect of the portfolio lifecycle reflects the trend among asset managers to deploy a single, holistic option across their front-to-back operations, meaning less data integration work for them from multiple platforms orbiting the portfolio, at a time when that focus is firmly set on regulatory datasets instead.

It’s clear that FactSet is precisely aware of what it has purchased in B-One, as the vendor’s Chris Ellis told Waters at the end of March: “We’re not going to do anything to mess B-One up. We’re just going to fill it up with FactSet data and make the results play nicely with the rest of FactSet. We just want to pour more gas on that fire.”

Asset managers’ focus on performance is at a peak right now thanks, in part, to heightened scrutiny from regulators into the entire trading lifecycle, but also because they are trying to wring as much value out of their analytics as possible. Integrating a combined data flow from FactSet and the B-One platform will sound like an attractive proposition for many buy-side firms.

London Calling

Another winner in last year’s Buy-Side Technology Awards was UBS Delta, the portfolio analysis and risk management service division of the Swiss Bank, which walked away with the best broker-supplied technology and best overall technology provider gongs. London-based StatPro swooped in on UBS Delta in early April, seeking to create a “point of call” for buy-side firms in performance and risk technologies. The complementary technology capabilities of both firms in the risk management and middle-office spaces seem to fit snugly, and there’s a sizeable amount of industry experience going around at both vendors, something that is becoming increasingly important for the buy side as interest in outsourcing and more service-oriented structures rise in prominence.

StatPro will also have an eye on the fixed-income risk management space while the deal comes to fruition, as many on the buy side are looking at alternatives to the Barclays Point–Bloomberg Port integration, an industry thorn I will be looking at in greater detail in next month’s Waters.

Last year, I wrote that for many asset managers, the middle office can act as a halter, a millstone around their necks that is under-funded and unscalable. While these deals, and others like them in the recent past, are unlikely to solve that issue overnight, there are clear moves by vendors in this space to improve the situation for the buy side, albeit through spending quite a bit of money themselves. 

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