Last week, GoldenSource announced that in 2010 it had achieved a 30% increase in revenues on the previous year, which Tom Stock, senior vice president of product management at the EDM vendor, attributes in part to the success of its new market data, data warehousing and risk management focused solutions. Speaking to Reference Data Review, Stock explains why the vendor has high hopes for the RiskHub solution and elaborates on its plans to extend further in the pricing space and add new functionality to its core applications this year.
In terms of product extensions this year, GoldenSource first began looking at the pricing space in 2010, with the concept of scrubbing the data underlying valuations. The proposition is to take in the vendor feeds for evaluated pricing, for example, scrub that data, provide comparisons between the underlying vendor data and introduce rules and hierarchies that can be applied to that data as it flows to downstream systems.
Stock indicates that a lot of the legwork work has been done and was included in the last release of its solution, but clients can expect much more to be added in the next release. To this end, he notes that GoldenSource has been working with a “major client” on the new functionality and one of the main selling points will be the auditability of the pricing data. The focus has also initially been on exchange traded instruments, but the vendor is poised to offer much more in the OTC spectrum.
“We are looking to provide an interface for terms and conditions data for derivatives valuations in order to be able to check tolerances and compare them,” says Stock. GoldenSource launched its data warehouse solution back in June last year and Stock attributes much of the vendor’s 2010 revenue growth to the take up of this new solution. After all, the vendor already had two asset management clients on board when it launched the solution, which pulls together GoldenSource’s various data management offerings under the banner of a consolidated repository for a firm’s various data sets.
The solution is aimed at helping firms to meet new regulatory compliance and risk management requirements by providing firms with a single repository of data including reference data, position data and transaction data.
“We were already engaged in the data cleansing and operational aspects of data management with our core EDM products, so it was a natural extension to move into the data warehousing space,” says Stock. “The data warehouse allows us to take the cleansed data and store it in a format that is compatible with regulatory reporting and to support functions such as risk analytics.”
On the subject of risk analytics, the vendor also launched its RiskHub solution suite towards the end of the year, focused on supporting the flow of data from underlying data management architecture into risk management systems. However, due to the fact it was launched officially in November, Stock does not attribute much of last year’s financial performance to the fortunes of the new risk management focused solutions. Nonetheless, he is convinced that 2011 will see RiskHub netting a substantial number of clients due to the appetite in the market for risk data focused solutions.
“The regulatory community is taking much more of an interest in the data underlying risk calculations,” contends Stock. “Firms are therefore being compelled to invest in risk data management in order to be able to demonstrate the levels of transparency required and to allow the regulators and clients to drill down into the underlying data in a single repository.”
The vendor also uses the ability to track the data audit trail as a key selling point for RiskHub, as well as this idea of supporting enterprise risk management via a single data hub. Hence Stock notes that this proposition has thus far netted the vendor a “very good pipeline” in terms of potential clients for 2011.
“From a whole solution perspective, we gave all of the pieces required to support risk applications such as securities master data, the data underlying valuations calculations including rates and curves and customer hierarchy data. That is what will differentiate us from the competition,” he claims.
In terms of new markets, last year also saw GoldenSource venture into the market data space with its partnership with analytics and data management specialist Xenomorph, which was announced back in March. The GoldenSource Market Data Solution (GSMDS), which was launched with much fanfare during FIMA in NYC, aims to tie up the disconnect between market and reference data and thus provide increased data quality, consistency and transparency across the investment process.
Stock indicates that this market data solution has proved to be a money spinner for the vendor thus far as it was second largest contributor to revenues in 2010, closely followed by the vendor’s core EDM solutions. He explains that the most interest in vendor’s core solution set has come from asset management and insurance firms seeking to invest in the management of their securities master data to meet the compliance requirements of regulation such as Solvency II.
This regulatory angle will, no doubt, continue to be a key selling point for the vendor this year, but GoldenSource is certainly not alone in its focus on Solvency II. Last year, EDM rival Cadis also released a platform targeted at enabling compliance with the new insurance focused regulation and one can expect much more on this front.
“The development dollars that were once flowing to the front office space are now being redirected to the back and middle offices in order to meet these new regulatory requirements,” says Stock. “Many are examining their data management infrastructures and the asset management community in particular is investing in data warehousing capabilities.”
He also attributes this interest to the requirement to support a more enterprise-wide approach to risk management from the buy side community, who previously tended to examine risk from a portfolio level.
“We are now seeing the core institutional asset managers looking to put in place capabilities to support enterprise risk management and see their exposures to entities within the market,” he elaborates. These firms are bringing this data together for risk management purposes and in order to refresh their performance and attribution environment.