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The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Catalyst or Bureaucratic Encumbrance?

Does the industry really need a central reference data utility in order to achieve a greater level of standardisation across the market? Should the European Central Bank (ECB) be in charge of leading such a global initiative? Would a commercially focused venture be more successful in this endeavour? These are all questions that have been on my mind over the last few weeks.

As you can see from our lead story, EDM Council’s managing director Mike Atkin is fully supportive of the ECB’s proposed utility approach to reference data. He firmly believes the central bank led endeavour will act as a catalyst to spurring the industry on to greater levels of data standardisation. In order to get the message out there, the EDM Council has been travelling along with the ECB over recent months to meet various regulators and industry associations with a sort of data roadshow approach to championing the idea.

According to Atkin, the concept has gone down well with the majority of these bodies and the ECB’s director general of statistics division, Francis Gross, is keen to get the message out to a wider audience. Gross likens the reference data space to the Tower of Babel: with so many formats and standards in place that it is impossible to operate efficiently. “Each source speaks its own data dialect,” he says.

This is why the ECB is keen to use its Centralised Securities Database (CSDB) as the foundations for a new structure: one that builds harmonised data standards into its foundations. Of course, not everyone in the market is so supportive of this idea. Over the course of numerous conversations I’ve initiated on the subject over the last few weeks, both vendors and bankers have suggested that a bureaucratic led approach to data standardisation may not be the best idea. One industry participant (who shall remain unnamed for now) succinctly put it: “There are vendors providing data in that space already, what would be the point of adding a bunch of bureaucrats into the mix?”

The ECB however, is not to be dissuaded. Gross will be taking the stage at Sibos in Hong Kong in September to attempt to convince those present of the benefits of a utility. Ahead of Sibos, I’m looking to garner more industry feedback on the subject – if you have a view on the proposed utility, drop us a line.

In other news and as noted by Reference Data Review earlier in the year, corporate actions are also proving to be big news for 2009. This month, further proof that there are more profits to be squeezed out of the sector was provided via the entry of two new contenders into the market: Xignite and Broadridge Financial Services.

Broadridge has launched a new fully managed corporate actions service and cloud services specialist Xignite has released a new web service aimed at providing low cost actions to corporate actions data. Both new services are aimed at specific but differing sectors of the market. While Broadridge’s service is aimed at those that choose to outsource the entire corporate actions lifecycle, the Xignite offering is aimed at the lower end of the market for smaller and mid-size firms that choose to access corporate actions data via its on demand web-based service.

Broadridge is therefore entering the service provider end of the market, whereas Xignite is aiming to be a data consolidator. The entry of two new solutions into the market is a significant vote of confidence in its strength at a time when firms’ IT budgets are so tight. Obviously there is no guarantee that they will gain market traction, but it can be read as an indicator that the data management vendor community will survive the downturn. After all, for corporate actions and reference data in general, where the regulatory community turns its gaze, the industry must follow.

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