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First Derivatives Acquires Reference Data Factory for US$10m

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It has certainly been a confusing year for clients and staff at New York-based reference data management solution vendor Reference Data Factory (RDF). Not only were they subjected to a demerger with data management consultancy LakeFront Data Consulting in January, they are now have an entirely new management team from First Derivatives to contend with.

Software and consulting services firm First Derivatives has recently purchased RDF for an estimated US$10 million. According to Dale Richards, CEO of LakeFront Data Ventures and board member of RDF, who has now joined the advisory board of First Derivatives, the two firms have been in discussions regarding the acquisition for a number of months. “We found each other in a successful shared client engagement a few months ago. The move was a natural fit and we moved rapidly,” he explains. First Derivatives currently has a software solution set focused on market data and risk management, which is largely aimed at those in the front office.

The acquisition of RDF, on the other hand, means the vendor is extending its ambitions into the back office and the world of reference data. The vendor is therefore hopeful RDF’s offering will sit well with the Delta suite of products, which includes algorithmic and programme trading solutions, market data solutions, risk management applications and market data management software.

First Derivatives’ CEO Brian Conlon reckons RDF’s product suite will fit “seamlessly” into its Delta product suite. “RDF has a successful track record developing financial enterprise data management software, combined with world class data expertise. We will continue to invest in R&D and the acquisition will expand our data management capabilities,” he says.

Richards adds: “First Derivatives was looking for a perfect fit in terms of capabilities in reference data that included integration tools, feed handlers, a data model, data distribution and deep domain expertise. RDF met the need of expanding our data management capabilities. RDF’s approach to data management using loosely coupled components, its strong orientation to servicing data consumers and integration, going beyond golden copy with ‘multiple versions of the truth’ and the ability to rapidly integrate RDF with First Derivatives’ products – made RDF an ideal target for us.” RDF, which specialises in data management systems and currently has offices in New York and Toronto, was founded in 2004.

First Derivatives, on the other hand, has been in the market for 13 years and currently employs 360 people worldwide. First Derivatives also provides consulting services to clients along with its solutions and it currently has operational centres in London, Stockholm, New York, Chicago, Toronto, Sydney, Singapore, Hong Kong and Shanghai. This global reach was definitely part of the attraction of the acquisition for RDF and it has already begun to pay off, according to Richards. “The expanded client reach for RDF will be tremendous. First Derivatives’ footprint is global and RDF offers a global solution that can be fully exploited in the First Derivatives world. It is clearly early days, but we’ve already begun to look at real opportunities together in California, New York, Europe, Canada and Australia,” he explains.

Garry Wright, chief technology officer at RDF, adds: “It gives our existing product suite additional channels to market through the existing First Derivatives client base, as well as extending out global footprint.” Richards also reckons RDF clients will benefit in a number of ways because of the acquisition.

“Firstly, we will be able to offer our clients the scale of a much deeper bench of implementation consultants and domain expertise when required. In addition, First Derivatives provides a blue chip training programme for all of its capital markets consultants and now, as part of the First Derivatives family, RDF and the reference data domain will be added to this programme for all consultants,” he contends. “Secondly, the acquisition will enable RDF to accelerate and expand research and development, providing our clients with enhancements we expect to leverage across a broader First Derivatives client base. And thirdly, we are linking RDF to the First Derivatives Delta suite, which will provide new and broader features and capability,” he adds. As for integration challenges, Richards is confident that from a technology, positioning and architecture perspective, it will be a “clean” process. So, perhaps the trials and tribulations of the smaller vendor are finally over.

First Derivatives certainly seems at the outset to be a better fit for RDF than LakeFront Data Consulting, which demerged from RDF earlier this year to avoid what Richards described as “internal and external confusion” . With a new larger organisation at the helm, RDF should be able to benefit from economies of scale and greater geographic reach. Exactly how the acquisition will impact either’s commercial proposition is yet to be seen in the cold light of day, but it seems that First Derivatives may prove a better marriage partner in the long term.

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