Following the announcement that it has added an interface for corporate action data from FactEntry earlier this month, Point Nine CEO Yannis Matsis spoke to Reference Data Review about how IT investment such as this is reflective of its future client focus. The vendor has traditionally pitched its various solutions, which include a corporate actions processing solution, at the hedge fund sector, but it is now expanding its reach into the more conservative end of the market, says Matsis.
As well as corporate actions processing, the vendor also offers various other back office and trade processing solutions including trade capture and risk reporting services. The FactEntry data feed integration is part of Point Nine’s investment in its platform to make it more appealing to the investment management community. The short term IT investment to build an interface to FactEntry has therefore allowed the vendor to expand its offering of real-time corporate action data, including credit and fixed income data.
“In terms of our corporate actions offering, we deal with the data from a processing point of view rather than act as a data vendor,” explains Matsis. “We disseminate the information on corporate actions events so that our clients can take action on these. The FactEntry data is there for our clients to choose if they wish to but we do not force this data upon them. Clients that opt to receive the data feed via the interface must sign a contract directly with FactEntry.”
As corporate actions has become an increasingly important area for market participants in the wake of the credit crisis and the industry focus on cost and risk, the move is in keeping with the concerns of the vendor’s potential buy side clientele. The vendor’s client base is also in the process of changing as a result of the crisis and events in the market, says Matsis.
“Two years ago, typical clients for us were hedge fund start ups that wished to outsource their entire back office processes to us, including corporate actions processing. Today, clients are more likely to take a modular approach to implementing solutions and have opted to take different combinations of our selection of solutions,” he continues. “The hedge fund market has seen a lot of bad times over these two years and many of our clients have gone out of business.”
In order to ensure that Point Nine doesn’t suffer the same fate as its client base, the vendor has decided to expand its client reach into the asset management sector. “Our charging model for these start ups has been based on assets under management and as these have been hit hard by the economic climate, we have been hit by these losses. The more positive development of this climate is that the more traditional end of the market is now keen to invest in solutions to increase automation and drive down costs,” he elaborates.
The vendor’s corporate actions processing solution has proved popular with its entire client base of seven financial institutions, says Matsis. “They have not opted for the solution on a standalone basis but all of our clients have chosen to implement the solution so far.”
Over the next 12 months, the vendor is hoping to double its client base by adding another seven buy side firms to its books. “As a small vendor, we have a limited capacity for onboarding clients in a given period of time. We hope to get a new client on board every two months over the next year,” he explains.
The onboarding process has been lengthened by moving into the realm of traditional buy side firms, says Matsis. These firms have legacy applications to which the vendor must add custom interfaces, rather than just turning on a system on day one for a start up hedge fund.
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