The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

DIFC Bags SmartStream Technology For Hosted Data, Processing Offering

The acquisition of UK mid and back office systems vendor SmartStream for £200 million by the Dubai International Financial Centre (DFIC) – owner of the Dubai Stock Exchange – made headlines for a number of reasons. Not the least of these was the fact that the acquisition came just a month after SmartStream was forced to postpone its initial public offering due to weak market conditions.

Observers also counted this move by DIFC as further evidence of the Dubai group’s acquisitive and global expansionist strategy. Omar Bin Sulaiman, chairman of DIFC Investments, reckons the SmartStream acquisition “enhances the DIFC’s role in the global financial services industry and further establishes the DIFC as a global gateway for international financial business”. For data aficionados though, a somewhat throwaway line in the statement regarding DIFC Investments’ acquisition of SmartStream from private equity firm TA Associates (and SmartStream management and employees) catches the attention.

For DIFC intends that the SmartStream technology “will be at the heart of the secure, scalable trade processing and data management platform it is building”, to support the creation of “a new generation of hosted information and trade processing services”.

The SmartStream suite of Transaction Lifecycle Management (TLM) solutions’ main strengths are in the areas of reconciliations and exception management for use in financial institutions’ middle and back offices. It does have some exposure to reference data management through TLM corporate actions – a solution designed to consolidate information from multiple sources to provide a single enterprise corporate actions service covering multiple markets and instrument types. The system is said to manage the capture, cleansing and distribution of data to create a golden record.

Were DIFC to be planning for its “hosted information” services to span a broader range of reference data types it would likely need either to extend the capabilities of the SmartStream system, to build more technology or to buy additional technology or services in the reference data space. Nonetheless its acquisition of SmartStream indicates a commitment to the provision of hosted information services – which is timely, considering that in a troubled financial markets environment the appeal of outsourced services for what some argue can be utility services – and this includes certain types of reference data – is likely to increase.

For SmartStream’s part, its marketing director Alastair McGill says in the short term it will be business as usual for customers and employees as SmartStream continues “to develop and deliver new TLM solutions”. “However over the medium term,” he continues, “new and existing customers will benefit from accelerated investment in our technology development and global delivery capability. While we already share a number of mutual clients, this acquisition provides SmartStream with greater access to a broad array of new clients and strategically important Middle Eastern and global markets.” Longer term, he says, “this acquisition presents an exciting opportunity for SmartStream to place our proven technology at the heart of the DIFC’s platform for delivering a new generation of hosted information and trade processing services”.

The concept of outsourced data services is clearly not new, but as has been well-documented in Reference Data Review over the years, the experiences of the providers that have entered into the space historically have been patchy, with successes hard to come by.

Nonetheless a couple of drivers together could serve to push hosted data services and outsourced data management to the fore. One is the prospect of tough times ahead in the markets, which is inevitably leading financial institutions to streamline operational costs. The other is increased regulatory demand for transparency – driven by MiFID, for example – which is creating a requirement for absolute excellence in data management. At a recent Omgeo-convened roundtable in London on the future of the back office, Anthony Kirby, currently on gardening leave having left his role as regulation guru at Accenture to join Ernst & Young, said there is great potential for firms to make businesses out of their expertise in reference data. “There are big opportunities on the data side,” he said. “We are seeing the major firms appointing chief data officers, and beginning to commercialise reference data: and all this at time when the regulators are demanding firms offer greater and greater transparency.”

Related content

WEBINAR

Upcoming Webinar: Adverse media screening – how to cut exposure to criminal activity, from money laundering to human trafficking

Date: 23 September 2021 Time: 10:00am ET / 3:00pm London / 4:00pm CET Duration: 50 minutes Screening for adverse media coverage of counterparties is a significant challenge for financial institutions. It is required by regulations such as the EU’s sixth Anti-Money Laundering Directive (AML 6), and is one of the most effective ways to steer...

BLOG

Blackmore Capital’s Collaboration with OTCfin Completes Integration of ESG Factors into Investment Process

Blackmore Capital, a Melbourne-based asset manager set up in 2018, and New York-based OTCfin have completed the integration of ESG factors with financial data for all Blackmore portfolios. By incorporating ESG factors into Blackmore’s investment process, OTCfin’s risk and regulatory reporting solution will help the asset manager’s team improve portfolio monitoring from both a financial...

EVENT

TradingTech Summit London

TradingTech Summit London will explore how trading firms are innovating in today’s cloud and digital based environment to create flexible, scalable trading platforms to support speed to market and business agility. Leveraging the cloud, AI and ML technologies to get an edge, automate processes and simplify operations in a cost effective way is the name of the game and will share practical insight from practitioners and technology leaders who are innovating and driving forward change in trading operations.

GUIDE

Entity Data Management Handbook – Seventh Edition

Sourcing entity data and ensuring efficient and effective entity data management is a challenge for many financial institutions as volumes of data rise, more regulations require entity data in reporting, and the fight again financial crime is escalated by bad actors using increasingly sophisticated techniques to attack processes and systems. That said, based on best...