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McGraw Hill Financial’s Split from S&P’s Ratings Agency Signals its High Hopes for Data, Pricing and Analytics

The decision taken by Standard & Poor’s to split its data, pricing and analytics business from its ratings agency business, and to rebrand it under the new moniker of McGraw Hill Financial, is a further signal that the vendor has high hopes for this area of its business. Given the flack that the ratings agencies are receiving from both regulators and the industry at large, it is no surprise that the vendor is keen to rebrand the business and associate it with parent McGraw Hill rather than S&P.

Employees of the division, however, may be facing something of an identity crisis, given that the vendor has rebranded the business line several times over the last year or so. First it was Standard & Poor’s Fixed Income Risk Management Services (FIRMS), then Valuation & Risk Strategies and now it’s McGraw Hill Financial (S&P’s stationers must be doing a roaring trade in business cards). In fact, McGraw Hill Financial was initially used as an internal divisional name at the start of this year, but the rebrand does make sense as it signals the business’ new independence from the fortunes of S&P.

Damian Burleigh, managing director for EMEA at McGraw Hill Financial, spoke to Reference Data Review about the rebrand back in January and noted that the decision to split out the business would permit this division a greater say in the direction of company overall and allow it to promote these capabilities in a more integrated fashion. He indicated that the rebranding would also be reflected gradually within the individual products and solutions of the division. “Over time, we will also work to leverage individual product and platform capabilities across the division and some may be merged into one solution offering,” he said.

Moreover, this move is far from a typical cost driven restructure: the focus is on growing, rather than rationalising the business overall. Burleigh indicated that division head Lou Eccleston would be looking to add more resources and staff to be able to scale the business to meet new opportunities in the data, pricing and analytics space.

Having all of the previously rather disparate data and analytics solutions under one brand and one divisional head – Eccleston was previously in charge of the fixed income risk management and valuations solutions but has now taken ownership of all the data and analytics products – should allow for a much more joined up approach to the sector overall. Burleigh explained that the restructure would allow the vendor to more easily identify all of the individual parts of the division that could benefit from integration via increased visibility of potential tie ups between solutions.

Eccleston certainly has experience in this type of endeavour and was therefore likely selected to head the division in light of his previous roles at data giants Bloomberg and Thomson Financial. Burleigh, for one, reckons his new boss is well placed to be able to look at the individual components and capabilities of a business and understand how to combine and do more with them horizontally.

However, the plan is not for McGraw Hill Financial to take on Eccleston’s previous employers, data giants Thomson Reuters and Bloomberg directly. Instead, the focus is seemingly on further developing specialist knowledge and capabilities and tying the business’ fortunes to being a more nimble player in the space.

The vendor has also indicated that further M&A activity has not been ruled out with regards to bolt on acquisitions in the future. It is certainly no secret that S&P was a late bidder in the Interactive Data sale, so it certainly has an appetite for acquisitions, but only at the right price, evidently.

Organic growth will also be a big focus, once some of the integration work has been completed, and the vendor will likely be making good use of its enterprise data platform, which will be extended to support all related solutions. Burleigh noted that top of the list will be an integrated desktop that will provide one platform via its which clients will be able to access all of McGraw Hill Financial’s solutions. “This will provide efficiencies of scale to allow for the rationalisation of data feeds and will bring capabilities such as fixed income analytics into play. Enterprise data is at the core of this development, as it will bring together our Capital IQ, analytics and pricing data,” he explained.

This is likely all about having a robust data architecture that can support the vendor’s clients’ upstream and downstream data requirements. After all, the vendor has to support a lot of original data sources, such as for fundamentals data, which makes ensuring that data quality is not being negatively impacted downstream very important. Burleigh indicated that this enterprise data approach would also extend to S&P’s ratings business, as it is also critical to ensuring the quality of the ratings data.

The work going on behind the scenes at McGraw Hill Financial appears to be fairly similar to the activities going on within its rivals, such Thomson Reuters’ Enterprise business, with its aggressive hiring over the last couple of months, and Interactive Data, with its new owners in charge. Data and solution vendors are ramping up the levels of competition in the market, but who will win the industry’s votes?

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