An increase in trading of exchange-traded funds (ETFs) has prompted capital markets technology provider Itiviti to partner data analytics specialist IHS Markit to deliver an integrated ETF platform.
The solution, Tbricks by Itiviti for Delta One, combines Itiviti’s Tbricks trading system with SOLA, Markit’s ETF data service. Tbricks provides a scalable and customisable trading platform, while SOLA aggregates and generates key pricing and risk-related information, including daily portfolio composition, basket information, dividend forecasts and analytical datasets.
The aim is to provide a fully integrated ETF trading solution, from composition through to quoting, hedging and risk. Chris Anderson, Itiviti senior product manager, explains: “ETFs have exploded in recent years. With the increasing numbers and complexity of these products, the process is becoming a bit more painful and if it goes wrong it can be catastrophic. Last year, one of the main pain points we saw was around static data management. So, we set out to build an automated, completely hands-off static data integration solution – but also a workflow and value-add around that in terms of sanity checking, deviation checks and exception-based workflow. Traders can easily see whether they have the right composition, or whether there is anything they should double check.”
Itiviti decided to form a strategic alliance with Markit because SOLA is the industry standard in ETF and index static data, has a reputation for wide coverage, and accurate and timely data. Anderson comments: “Many of our clients and prospects are already clients of Markit so it made a lot of sense for us to do this. To be competitive, we needed to integrate with them.”
Tbricks by Itiviti for Delta One initially covers core ETF and static data management functionality, although Anderson notes there are “other challenges faced by ETF market makers that aren’t adequately served by existing tools”. Bearing this in mind, Itiviti and Markit are looking to address areas such as connectivity, new market models and venues, risk and inventory management.