Interactive Data’s Pricing and Reference Data business is extending its current business entity data offering with the launch of a new Business Entity Service in the second quarter of this year. The vendor has been offering a European only business entity data service, which is available as an optional module of FTS, since 2006 but this new launch extends the coverage globally, says Robin Simpson, managing director of Reference Data for Interactive Data.
“Our clients expressed a growing need for comprehensive services that link the universe of affiliated entity securities to their issuers to help them with managing risk and meeting the requirements of industry regulations, particularly in times of market volatility,” says Simpson.
The service is therefore aimed at those in compliance, risk, trading, research and database management functions within a financial institution in order to help these individuals analyse their firm’s exposure to various entities, industries and regions. It has been designed with a view to enabling firms to meet compliance and risk management requirements with regards to regulations such as Basel II, UCITS III, the EU Third Money Laundering Directive, MiFID and the USA Patriot Act, says the vendor.
Clients will be able to receive the data through a range of Interactive Data’s delivery systems, including the Securities Information Retrieval Service (SIRS), RemotePlus and its desktop service for clients.
“Our Business Entity Service, supported by our broad universe of reference data, can help our clients better understand an entity’s capital structure, as well as those of its affiliates,” claims Simpson. Accordingly, the service provides industry standard business entity information alongside Interactive Data’s range of security level reference data for US and international equities and bonds, including corporate, government and agency securities.
The rationale is that by identifying a firm’s global exposure to a specific entity, industry or region, a firm can better understand its capital structure and region-based risk exposure, as well as perform pre and post-trade technical analysis. The service will also provide a more complete picture of the corporate hierarchy of an entity to facilitate these functions, claims the vendor.
According to Interactive Data, the service can help identify the potential risks that could be triggered by corporate events affecting related entities from anywhere within the ‘family tree’ of the subject entity. In addition, it can help clients to comply with internal or client imposed restrictions on exposure to an entity.
The issue of entity data management has been on the industry’s radar following the collapse of financial institutions such as Lehman Brothers last year. As noted by a recent white paper by Standard & Poor’s, the credit crisis has highlighted firms’ lack of awareness surrounding their exposure to defaulting issuers of financial instruments and this is a growing area of opportunity for the vendor community at large.
However, there are still outstanding issues within the market due to a lack of a standardised business entity identifier. Although the new Interactive Data offering claims to include standard identifiers, it will still have to include proprietary versions in order to make up for the lack within the market.
Various initiatives have failed thus far to achieve traction within the market, as although the industry is well aware of the need for standards, it cannot seem to agree on what these standards should be.