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FT Interactive Leads Suppliers in Interface Race, Study Finds

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New research from A-Team Consulting, publisher of Reference Data Review, demonstrates market-leading reference data supplier FT Interactive Data’s dominant market position in terms of interfaces to a broad swathe of financial services software applications. The wide-ranging research – Software Providers: Working with Reference Data – offers a view of how reference data is used to drive applications performing a variety of strategic functions within financial institutions.

The findings also jibe with FT Interactive Data’s stated aim of making its data services available through a large number of third-party applications. In a discussion with Cort Williams, vice president of strategy and business development, and Marty Williams, vice president of institutional data delivery products business, RDR learned that FT Interactive Data’s strategy of collaboration with applications providers will continue.

Meanwhile, the company last month reported stable revenue growth for the fourth quarter, as its parent – Interactive Data Corp. – itself reported double-digit increases in both revenue and profit.

According to the A-Team Consulting research, which was published this month, FT Interactive Data leads its peers in terms of interfaces to application software, with interfaces available for 66% of 99 application providers surveyed (see Chart 1, this page).

Chart 1: Comparison: Percentage of Interfaces Across Data Vendors
Source: A-Team’s Software Providers: Working with Reference Data guide

That compared to 50% interfaces for Reuters, including 20% for its DataScope reference data product and 30% for interfaces established using Reuters Market Data System (RMDS), Triarch or TIB/Rendezvous. Bloomberg was third, with 41%; Telekurs was fourth, with 33% although the Swiss vendor has specific plans to integrate with a further 14% of suppliers surveyed.

FT Interactive Data also led the field in terms of the proportion of the total audience of application software providers equipped to receive its data (See Chart 2, this page). The research found the company’s data was available via 30% of the applications surveyed. Reuters (23%) came next, followed by Bloomberg (18%) and Telekurs Financial (15%).

Chart 2: Pie Chart – Percentage of Interfaces by Data Vendor
Source: A-Team’s Software Providers: Working with Reference Data guide

Most popular application type making use of reference data was portfolio management, whose surveyed suppliers had interfaces to more than 60% of the information suppliers covered by the report (see Chart 3, this page). Next was risk management, with more than 50%, and investment accounting and trade order management, with 45% apiece.

Chart 3 shows the percentage of software providers that claim to provide functionality
in each of our 11 operational categories (either standalone or integrated into another
Source: A-Team’s Software Providers: Working with Reference Data guide

The report – sponsored by FT Interactive Data, Reuters and Telekurs Financial – was based on responses from around 100 software application providers. Among the additional application types covered are: performance measurement, risk analytics, securities lending, corporate actions processing, data management, compliance and regulatory reporting.

Aside from the statistical analysis, the A-Team Consulting report provides an application-by-application guide to the reference data services currently required or available to drive the respective software package.

Cort Williams acknowledges the importance of third parties to FT Interactive Data’s strategy. “We take an ‘open’ approach to clients,” he says. “We want to be the preferred vendor, whatever the business model adopted by the client for managing data. With respect to the data management offerings, then, we work with all the leading players in the space. For example, Asset Control, Fame, Soliton. We work with all of them.”

But working with partners may extend to more acquisitive activity. “We’re looking at possible acquisitions to identify opportunities, to see if they’re good for our clients,” says Williams.

FT Interactive Data last year bought two front-office data properties, Comstock and the old PC Quote data business from Hyperfeed Technologies. While these form a discrete business area themselves, a presence in the front office may help FT Interactive Data ward off threats to its dominance in the back and middle office from real-time providers like Reuters and Bloomberg.

Williams says FT Interactive Data also plans “to continue in our position as premier content provider. We plan to add additional depth and breadth of coverage. At the security level, we’re listening to what our clients need in other areas of their business, like settlement.”

He continues: “With respect to content, no single organization has it all. We’re global, and that’s an advantage. We work with clients and industry associations to try to anticipate where growth is going to come from. We try to understand clients’ pain. There is no lack of information, it’s more about access.”

At the moment, he says, “We’re looking at real-time specifically and our breadth of offerings in general. So, should we be adding index data, ratings, corporate actions, other regulatory data?”

He acknowledges that in the real-time area, clients are looking to minimize the number of strategic vendors relationships. “We don’t want them to look elsewhere for that requirement. We have a global ticker with plenty of capabilities now. There’s a handful of players who do it properly. Comstock fills a gap in our securities information space. We’re also in a relationship with Moneyline Telerate, which we use as a channel for distribution of reference data to the front office.”

Williams believes that, in order to succeed, FT Interactive Data needs to be able to adapt to clients’ choices. “But at the same time, we need to avoid overextending, and that means working with partners.” So the pursuit of data interfaces in the wider market seems set to continue.

How this all translates into real dollar figures is hard to determine from published numbers. In its earnings report for 2003, Interactive Data Corp. said FT Interactive Data’s revenues rose 7% in the fourth quarter (or 3.9% before the effects of foreign exchange). Revenues in North America were strongest, with growth of 5.4%. European revenues decreased before the foreign exchange effect, by 1.7%. Asia-Pacific revenues, meanwhile, jumped 23% in real terms, but only 2.2% before FX effects.

Interactive Data Corp. doesn’t break out revenues or full-year growth rates or FT Interactive Data or its other operating units. A-Team Consulting, however, estimated FT Interactive Data’s reference data business revenues at $286 million in 2001 (in a sister report, Securities Administration Data: the Essential Piece of the STP Puzzle).

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