Our longstanding interest (obsession, some might argue) with the viability of the utility or shared-services model for reference data management was surely vindicated yesterday when the newswires outed the, erm, hush-hush SPReD project.
A contender for the mantle of the Street’s worst-kept secret, SPReD (for Securities Product Reference Data) comprises three major institutions (Goldman Sachs, JP Morgan and Morgan Stanley) and a technology platform supplier (SmartStream Technologies) in an industry initiative to reduce the cost of integrating, cleansing and distributing reference data.
The project has been alluded to at many of our Data Management Summits over the past 18 months or so. Certainly, the wire stories confirm what many observers understood to be how the utility would work.
According to The Wall Street Journal, “The new entity, which will create a stream of consistent data that banks use to help determine pricing and transaction costs, is the latest example of increasingly cost-conscious banks coming together to save on head count, expenses and time.”
Citing sources familiar with the development, The Wall Street Journal reported that the initiative – which is unlikely to retain the SPReD moniker – is likely to be launched as a separate entity in the next six to 12 months. First up will be listed derivatives and equities, followed by fixed-income securities, The Wall Street Journal reported.
The plan is to spin off the affected portion of SmartStream’s business, including reference data management clients, with the consortium banks each taking a stake in the new entity. Again citing sources, The Wall Street Journal put the founding banks’ investments at “seven figures” each.
We’ll be watching – and listening – with interest as developments unfold. All the more reason to stop by our next DMS series in London and New York, we reckon.
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