Just over a year after her appointment to the helm of Fidelity ActionsXchange, Laura Pollard indicates that the traditionally corporate actions focused vendor is set to expand its reference data reach under her leadership. The vendor is considering expanding its data cleansing solutions to areas such as entity data and moving further down the corporate actions processing chain, Pollard and Deborah Culhane, chief operating officer at the vendor, tell Reference Data Review.
Pollard, a 19 year Fidelity veteran, took over all aspects of ActionsXchange’s day to day operations in August last year when she assumed her role as executive vice president and head of the company. Prior to this role, Pollard two years as ActionsXchange’s senior vice president of client services, product development and implementation.
Following a period of bedding down within the role, Pollard is now focused on improving the vendor’s market proposition, both in its traditional corporate actions cleansing business and, potentially, in other areas of reference data management. “Our growth strategy is to build on our core capabilities by extending our current offering with additional tools to automate the downstream processing of corporate actions,” she elaborates.
This extension would potentially bring the vendor into competition with other corporate actions lifecycle data management vendors out there, for example SmartStream or XSP. Fidelity ActionsXchange has traditionally only seen direct competition in the form of the Depository Trust & Clearing Corporation’s (DTCC) Global Corporate Actions Validation Service (GCA VS), but this will change if it reaches further down the processing chain.
As well as getting more involved in the downstream management of corporate actions data, Fidelity ActionsXchange is also looking to branch out into other areas of reference data cleansing. “Initially we are looking at the pain points of our customers and we are getting involved in the area of US regulatory filings, which is closely related to the corporate actions space,” explains Culhane.
The vendor is also looking at the area of proxy voting, a space traditionally dominated by vendors such as Broadridge Financial Services. Tax, fixed income payment processing, entity data and class actions are also on the radar, adds Pollard. “We are responding to the requirements of our customers and looking to add value where they are struggling and need support,” says Culhane. “We can provide them with flexibility, customisation, control oriented environments and a limited IT spend.”
Fidelity ActionsXchange’s core capabilities can be leveraged to extend its client and market reach in this manner. “ActionCompare may have been built for corporate actions data but it has the capability to be extended to other data areas such as entity data,” says Culhane.
The idea behind this extension is to resolve what Culhane calls the “conflict of cost and risk” in the market. “We are seriously considering the entity space and we feel we could bring a broader strategic value to other reference data processes such as these,” she continues.
Entity data has been a particular area of interest for vendors this year in light of the collapse of Lehman Brothers and the regulatory focus on exposure tracking. The lack of standardisation of this data has long been bemoaned by the industry but very little has been achieved towards establishing a universal identification system. This therefore makes the space especially attractive for the data vendor community as it represents an area of complexity in which they can pitch their solutions.
Although the vendor is keen to expand its reference data reach, it has not taken its eye off the ball with regards to corporate actions, assures Pollard. “The market is demanding more timely information and we are constantly looking for alternative sources for corporate actions data in order to make sure we are providing our customers with a truly multi-source approach,” she explains.
“This year has proved particularly challenging for data managers involved in corporate actions processing due to the increasing complexity of corporate actions events, as firms have come up with even more innovative events in reaction to the market downturn,” says Culhane.
Rather than imposing regulation on the industry, Culhane is therefore keen for an industry solution to be reached with regards to corporate actions data standardisation. The work of industry bodies such as the Securities Market Practice Group (SMPG) is key to this endeavour. “It would be impossible to have 100% standardisation and automation in the corporate actions space; any model you impose will be static but the corporate actions environment is dynamic,” she explains.
Automation of corporate actions data processing reduces risk and creates better clarity but it will never be a complete solution as there will always be some level of manual work required, continues Culhane. This is where Fidelity ActionsXchange pitches its offering: cleansing data from the source, providing analysis and flexible tools, adds Pollard. “This is the value beyond merely providing golden copy data; we provide both interpretation and guidance, both of which are needed in areas of particular complexity,” she explains.
As part of this risk management endeavour, the vendor provides risk ratings for its data so that any data that has not been checked against secondary sources is clearly labelled with an ‘unconfirmed’ status, says Culhane. “This, along with the ability to support reporting and benchmarking, means that we have experienced a strong retention rate and new sales this year,” she claims.
The hedge fund sector has been hard hit by the crisis and downturn in the markets, but the flexibility of the vendor’s products has helped it to weather any client disappearances, she continues. However, much like the rest of the vendor community, Fidelity ActionsXchange has had to revise its pricing structure somewhat to allow those with newly limited IT budgets to do more with less. “There has been absolutely no appetite for increases in cost,” says Pollard.
The future will involve keeping up with the changes in the market such as the movement towards standardisation and the development of XBRL in the corporate actions space, adds Culhane. Fidelity ActionsXchange’s biggest current competitor DTCC has bagged itself a seat at the table of the XBRL initiative, along with Swift, and Fidelity needs to make sure it is also actively engaged in the developments.