Dublin-based PolarLake has tailored its reference data distribution capabilities to create a trade lifecycle solution for the OTC derivatives marketplace. The new platform provides integration of FpML (Financial Products Markup Language)-based trade messages, reconciliation and trade matching, and business process management for OTC derivatives.
According to CEO John Randles, the new platform emerged from the company’s client activities in derivatives in general and FpML in particular, which have been ongoing for quite some time. “Unfortunately,” he says, “we kept this a secret, and this release is intended to make people realize what technology we have in this space.”
In productizing its OTC derivatives capabilities, PolarLake has been able “to leverage our product in reference data distribution to build a solution focused on data analysts rather than a pure technology product,” Randles says. “This is a key differentiator for us.” The company has also leveraged other key components of its offerings, including its reconciliation service, he adds.
Randles says the move was also inspired by client requests that it expand beyond its core reference data distribution and FpML integration activities. “People know us for being the best integration platform in the market for dealing with FpML and we have seen a huge spike in the interest in this technology,” he says.
“However, we have also seen large sell sides and fund administrators that are looking for broader solutions – including reconciliation, matching, connecting to the confirmation services, BPM etc. Our release now covers those areas so the onus is not on the firms to figure it all out for themselves. OTC derivatives integration technology is moving beyond the early adopter stage, so this is great timing for us.”
Randles says the marketplace is increasingly seeking solutions to complex problems, and has grown increasingly frustrated by traditional software suppliers. “Traditional reconciliation vendors,” he says, “are very comfortable in a high volume cash and equity environment, but have no concept in their fixed models of how to manage a thousand leg derivative. Their product architectures are fundamentally unsuited to the problem and cannot deal with the complexity of the OTC derivatives market. There is not a simple ISIN in the OTC market. “
Randles says PolarLake’s underlying technology, based on a patented XML pipelining engine, “is inherently suited to the unstructured nature of OTC derivatives and it is around this platform we have built the applications and algorithms in our solution.”
These developments have coincided with the growth in urgency around operational issues relating to OTC derivatives. Says Randles: “As can been seen in the recent A-team Group study on instrument data, OTC derivatives support is the number one issue making people look again at the data strategies. According to one firm surveyed, ‘50% of the firm’s manual data effort goes into sourcing and resolving issues in OTC products.’ This is typical of the firms we are dealing with where they want a specialized solution to complement existing data infrastructure.”
With the new OTC derivatives platform, PolarLake is targeting sell side institutions, custodians /fund administrators and large buy side organizations. Among PolarLake’s data integration clients are JP Morgan, Societe Generale and Pioneer Investments.