S&P Capital IQ has set out its store following the February acquisition of risk analytics provider R2 and the April addition of real-time exchange and market data supplier QuantHouse saying its existing products will be integrated with the new arrivals to deliver more and more innovative solutions.
According to Lou Eccleston, president of S&P Capital IQ: “S&P Capital IQ was founded in November 2010 by pulling together lines of business provided by Capital IQ, Global Credit Portal and MarketScope Advisor desktops, enterprise solutions such as S&P Securities Evaluations and research including S&P Equity Research. We looked at the combined business as a portfolio of capabilities rather than products and considered what was missing.
“We had a tremendous library of single security applications, but we did not have portfolio management and risk capabilities. Neither did we have real-time capability. I like to call S&P Capital IQ a $1 billion start up, but we needed to fill the gaps. We looked at build versus buy analysis and decided to pursue an organic acquisition strategy that would develop applications that could be plugged into our core desktop solutions and services and accelerate our progress. We also wanted to grow our talent. Both QuantHouse and R2 were early-stage companies with differentiated intellectual property and talented teams that wanted to be part of our team.”
While S&P Capital IQ look at many possible acquisitions after its formation, R2 and QuantHouse were perceived to fit well from both a product and people standpoint. Both the acquisitions’ management teams and all their employees have joined S&P Capital IQ – some 90 from QuantHouse who have become part of the company’s Enterprise Solutions unit and 30 from R2, a company formed in 2006 and initially incubated by the Fields Institute for Research in Mathematical Sciences in Toronto, Canada.
All the teams remain where they were, adding to the company’s network of global technology talent centres, which includes two centres in India. The company has since added a further 120 technologists bringing S&P Capital IQ’s total global workforce to 7,000 including a technology team of about 400.
“We really needed more people to create differentiated solutions and continue to innovate,” says Eccleston. “The R2 employees have become our risk analytics team and the QuantHouse employees our real-time team.”
In terms of product development, Eccleston says there will be no disruption for existing QuantHouse and R2 customers, suggesting they will be able to upgrade to more sophisticated integrated solutions at a later date, but only if they want to. Meantime, he expects to show all customers a roadmap of how R2 capabilities in portfolio risk analytics will be added to products such as the S&P Capital IQ desktop in mid-May. A roadmap for QuantHouse services and solutions is expected to be ready in a couple of months.
“The S&P Capital IQ desktop is a good data mining tool, but it had no portfolio capabilities. The inclusion of R2 technology means we will be able to go to the buyside and offer portfolio solutions we haven’t been able to offer in the past. The S&P Capital IQ desktop will allow users to manage portfolios and then run risk analytics.” The first applications in this space are due for release in late 2012 or early 2013.
QuantHouse’s real-time technologies are expected to be used across a number of S&P Capital IQ products in different ways. An early initiative is the consolidation of all S&P Capital IQ data feeds, including fundamental, fixed income, equity and derivatives data, into an integrated low-latency feed based on QuantHouse technology. Some datasets are expected to be available late this year, with the whole consolidation process expected to take about two years.
The acquisition of QuantHouse will also add access from S&P Capital IQ’s desktop and enterprise solutions to exchange pricing globally and including securities valuations and portfolio analytics. Integration here suggests outcomes such as real-time equity pricing as a result of exchange feeds becoming part of S&P Capital IQ’s valuations business, or securities pricing coupled to R2 analysis of securities holdings. Acquired technologies are also being used to develop progressive user interfaces including data visualisation.
“The acquisitions mean we will be able to offer our customers more compelling solutions,” says Eccleston. “We will use all our products and integrate them and use QuantHouse’s real-time technology to replace our delivery mechanisms.” On the back of QuantHouse technology, Capital IQ also plans to build its own real-time monitors, derived datasets and analytics.
With roadmaps for QuantHouse and R2 in the making, and the acquisition of OTC market data provider CMA expected later this year, has Eccleston closed the corporate cheque book? “We are now in core execution mode and our priority is to drive organic growth. We are not looking for more acquisitions and we don’t have any capability gaps, but if we find something that fits we are always open to opportunities,” he concludes.
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