Reuters has long been a dominant player in front-office data. Can it leverage that position to gain critical mass throughout the enterprise? RDR talks to reference data chief Kevin Bradshaw
In the aftermath of its abandoned Synetix venture with Belgium’s Capco, Reuters is embarking on a reference data strategy of its own, based around its DataScope product set. At the height of the U.K.’s longest and hottest summer on record – or so we reckon – Reuters has been bringing to market enhancements to its reference data product offerings, with an expanded relationship with SS&C Technology and the strategic addition of some structured product content.
Even to disinterested third parties, Reuters’ conclusion that this segment could be a lucrative complement to its traditional front-office business – which has been hurt by contraction within the investment-banking marketplace – would seem a logical or even obvious one.
Kevin Bradshaw is global director of enterprise information products at Reuters and, as such, is leading Reuters’ renewed assault on the reference data market segment. He appears to be keeping busy.
Bradshaw’s mandate is put DataScope firmly on the map, addressing a marketplace being fought over by the likes of FT Interactive Data, Telekurs Financial and Bloomberg Data License. Bradshaw’s initial focus is on bolstering the product line in the equities and fixed-income areas. Reuters itself has spent substantial resource particularly in equities; its fixed-income coverage, meanwhile, was broadened and deepened by the acquisition of Bridge Information Systems and Bridge’s EJV product line.
The deal with SS&C, announced earlier this month, is in effect an expansion of an earlier accord signed in 1996. Under the terms of the deal, SS&C will make Reuters’ fixed-income pricing and descriptive data available to clients of SS&C’s PortPro accounting and portfolio analytics system.
Specifically, SS&C will offer PortPro clients access to Reuters’ DataScope Portfolio intraday, end-of-day and historical pricing data, cross-reference data, terms and conditions, and corporate action information, and to its DataScope Fixed Income Extractor feed and front-end, with access to 100 data fields for around 1.5 million bond issues.
For SS&C, the deal allows it to offer the same pricing source for clients’ back-office applications – i.e. Reuters – as many of them are using in the front office, with the logic that data mismatches should thereby be minimized. SS&C is a mid-tier provider of portfolio and order-entry systems, primarily to U.S. investment management firms and regional banks.
While Reuters boosted access to the former group through its purchase of Bridge, the latter effectively represents virgin territory for the vendor.
Bradshaw won’t say how big the new SS&C audience might be. But he does say that the SS&C deal is illustrative of the new approach that Reuters is taking to its reference data business, post-Synetix.
The new strategy is a three-pronged one. First – logically – Bradshaw plans to tie Reuters’ pricing and descriptive data to existing Reuters applications and products, so that DataScope will be packaged with the likes of the Kondor+ risk management system.
Second, in a more daring shift, Reuters will partner with third-party applications providers with proven client bases. SS&C represents the first step in this aspect of the strategy, and Bradshaw says the market can expect to see similar such deals, with third-party suppliers whose applications require accurate end-of-day and reference data.
Finally, and along similar lines, Bradshaw plans to make Reuters DataScope data available via fund administrators and fund accounting service providers, who in turn will use the information to calculate net asset values for their clients.
As it increases its efforts in the reference data space, Reuters will centre its activities around the new DataScope Portfolio product, which is a inquiry/retrieval system that allows clients to request valuations, including NAV calculations, for specific portfolios.
DataScope data is additionally available via Reuters’ DataScope On-Site service – effectively, an on-site Sybase database application for large clients based around the former EJV for U.S. bonds – and via straight FTP delivery for both equities and fixed-income end-of-day pricing, which is targeted at clients who want broad market coverage.
The announced addition of commercial mortgage-backed securities (CMBS) data to DataScope, meanwhile, underscores Bradshaw’s continuing efforts to expand the product’s coverage.
Bradshaw says he works “hand in glove” with Reuters’ EVP of fixed income, Jon Robson, in identifying strategic bond content sets for DataScope, and this would appear to be among the first fruits of that relationship.
Reuters’ interest in CMBSs and structured products in general stems from the increase in holdings of such intruments in the U.S. marketplace, a trend spotted by Reuters a year ago.
Bradshaw says the CMBS data will be generated by Reuters’ own pricing team in New York.
This group, comprised of former bond market practitioners, will hand-price CMBS instruments using Standard & Poor’s Conquest analytical and pricing engine. Bradshaw says Conquest was selected after an evaluation of several other market offerings, in part because it has broad industry acceptance for pricing of CMBSs.
The addition of CMBS data points to one of two content hot spots for DataScope, according to Bradshaw. He says bond data in general, and structured products such as mortgage- and asset-backeds in particular, will be a focus for DataScope, driven by what he calls “huge demand” for such data from clients. The second major focus will be on equities content, he says.
Bradshaw’s efforts overall are tied to Reuters’ broader strategy of ensuring its offerings are more tightly integrated. As the long-time market leader in front-office data services, Reuters has been criticized for lacking such integration in the past.
It is now striving to align its back-office offerings with its front-office terminal and feed businesses, in a bid to offer clients consistent data through the transaction cycle. This, Bradshaw says, is a “huge requirement” among clients.
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