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ICMA Ltd Renames, Builds Warehouse To Support New Information Services

Under its new name and governance, Xtrakter – the market services division of the International Capital Market Assocation (ICMA), formerly known as ICMA Limited – is targeting a higher profile as a data vendor.

Xtrakter is gearing up to unleash a raft of new fixed income pricing and reference data products, and believes its legal separation from the trade association within the ICMA group of companies (effective January 1) will enable it to better “respond rapidly to market demands”, according to its director of product management Graeme Austin.

The new product strategy on which Austin has been working since he joined the company last year (Reference Data Review, October 2007) is poised to receive internal approval prior to being put out for customer review. Extensions to Xtrakter’s data services – which currently include the Computer UPDated International Database (Cupid) of securities terms and conditions data and the ICMA price service, comprising bid and offer quotes on fixed income instruments provided by the ICMA council of reporting dealers and taken from trades entered into its matching and reporting system Trax2 – are a key component of this strategy. Work on a data warehouse to support the creation and delivery of new fixed income data services is well advanced, Austin says. This repository is designed to enable Xtrakter to more fully capitalise on the data assets it has acquired through its provision of Trax2.

The name-change and new governance are being positioned as the culmination of efforts during the past year since Kevin Milne, who formerly led Thomson Financial/DTCC joint venture Omgeo in Europe, Asia and Australia, took the helm at ICMA Ltd (Reference Data Review, February 2007). Going forward, Xtrakter says, it will have “greater freedom to explore new business strategies” and expand its client base. The need to respond rapidly to customer requirements was not best served while the market services division was “entwined with a trade association that works on a committee basis”, Austin adds.

An early sign of a sharper commercial approach is a 35 per cent reduction in fees for reporting of ICMA trades, implemented from January 1. “We are minded to reduce them further, depending on how the business grows,” he says. “As a market utility we have to offer competitive rates to our subscribers.”

The trade association also benefits as a result of the legal separation, he contends, since it was proving “difficult for ICMA to lobby successfully while part of its business was revenue generating, even if what it was lobbying for was for the benefit of the industry as a whole”.

On January 8 Xtrakter appointed a new board of directors, made up of representatives of ICMA and Xtrakter management. It is “currently examining additional ways to bring (its) primary subscribers into the firm”, Austin adds. While Xtrakter is now owned by capital market participants through ICMA, industry sources suggest there could be a further transition of ownership to market participants.

Xtrakter will now be entirely self-funding, and it will be successful in its own right, Austin insists. “Historically we have made a surplus which met the requirements of the trade association, so there wasn’t any need to crank the business really hard,” he says. “Now we are realigning the sales activities and getting closer to our clients in order to ensure upticks on the revenue side. We are in control of our cost base, because that is something we have watched very closely for many years. We have forward looking contracts for our data. Our 2008 business plan will be achieved.” Xtrakter’s product roadmap for the matching and reporting system Trax is scheduled to get internal approval this month and go out to clients for review next month, with the roadmap for information services being approved a month or two later, Austin says. “As we speak we are building a data warehouse to support our information services. We have installed the hardware and software, and some prototypes are running, and now it is a question of establishing with our clients the order in which we roll out the services we plan to create. We have not bought a data management system. We are using standard tools – HP and Microsoft SQL Servers. We have a special piece of software to extract data from the HP Non-Stop hardware on which Trax runs in real time and replicate it in the data warehouse. We are using standard Microsoft query and analytics tools, and we will acquire others as we need them. We won’t be bespoking our own unless there is nothing in the marketplace for us to use. Our business is data and matching, not building data replication code. We will be tweaking the analytics to meet our own needs but using standard software.”

The emphasis is on flexibility, to enable Xtrakter to offer information services targeted to meet its users’ needs, he continues. “The data warehouse is structured so that the layer that takes the data in is separated from the storage which is separated from the data delivery to clients. We have various mechanisms to deliver data to clients including data files and spreadsheets. The principle is to take all the data we are gathering anyway and package it to meet the requirements of different market sectors. For the buy side, end of day pricing is a NAV calculation, while for a big investment bank it’s a mark to market facility. We have the data items. It’s about identifying which ones clients want and how they want to receive them. The data warehouse has the flexibility to enable us to take various fields and deliver them through standard delivery mechanisms.”

Services under consideration by Xtrakter include time series data and a prospectus database. “We have every end of day price for European bonds, from which we can create a time series database,” Austin says. “We also have a huge prospectus database, containing every public bond issue in electronic format, from which you could find terms and conditions for, say, a bond issued five or 10 years ago.” Xtrakter has a stated intent to raise its profile as a data vendor, he continues. “We do intend to become better known as a data vendor. We will target the space over the next 12 months, specifically in the second half of the year once new products are being rolled out and we have made some significant enhancements to our existing offerings. Up to now, primarily this data has been stored and then archived. Now we will store it, archive it and put it in the data warehouse and monetise it.”

Planned enhancements to Trax include downstream STP to the ICSDs and a browser version of the client system providing a minimal IT footprint at the client for low volume users. “We also have a target to grow the community (of Trax users) in the next year and beyond to include more liquidity takers,” Austin says. “We already have the major bond market liquidity providers. We need to grow our community of liquidity takers further into the hedge fund space, for example.

“We want to add value to the pure match. Matching is good. Taking the matched trade and doing something else with it is even better – for example routing it for downstream STP,” he concludes.

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