Given the intense focus on counterparty risk in the post-Lehman world, it is no surprise that various members of the vendor community are teaming together to tackle the entity data space. One such partnership has resulted in the integration of EDM vendor SmartCo’s DataHub solution with CounterpartyLink’s issuer, client and counterparty data. James Redfern, head of sales and marketing at CounterpartyLink, explains that the two vendors first got talking about the solution through a mutual client and things progressed from there.
Redfern explains that the two vendors have been in discussions about the subject for some time, although the deal is not exclusive or part of a competitive bid. “They have a specific module, the Business Entity Module, within the SmartCo DataHub that focuses on issuers, clients, counterparty and other legal entities, that is very applicable to CounterpartyLink’s target market within the financial services community,” he says.
The vendor hopes that the partnership with SmartCo will aid the mapping and distribution of CounterpartyLink’s data at their mutual and future clients. The integration of CounterpartyLink content into SmartCo’s technology therefore reduces a dependence on the client in managing the services from these two vendors themselves. “It is a partnership that enables our mutual clients to acquire and manage legal entity data,” adds Redfern. “This opens up new opportunities to both parties to further promote and distribute applications and content to existing and prospective clients.”
CounterpartyLink’s legal entity data is aimed at allowing buy and sell side firms to reduce the burden of collecting and maintaining core information, such as client and issuer ownership hierarchies, which is required to support daily account opening, KYC and counterparty risk processes. The focus of the vendor’s offering is to provide accurate information that is compatible with clients’ regulatory obligations. To this end, the data is maintained and linked to and sourced from company registration documents, regulatory and exchange filings, and any other primary sources of information that evidence the accuracy of CounterpartyLink’s information.
Pascal Mougin, chairman of SmartCo, is convinced of the valuable nature of this data proposition and reckons the partnership will allow clients to improve the reliability and efficiency of their information processes. “The speciality of CounterpartyLink’s data research and maintenance processes, combined with SmartCo DataHub’s powerful and scalable data management solution, will enable financial institutions to manage and cross reference legal entity data with other data sets with complete efficiency,” he claims.
For its part, the Smart DataHub is a data management solution that aims to enable centralised data management, data quality control, auditability, security, real-time data analysis and the management of multi-contributor functionality. The solution covers reference data, market data and operations data, and now has the legal entity data spectrum tied up too, according to Mougin.
The proposition is a reaction to the customer push towards getting vendors to do a lot of the data integration work before the data is provided to them, says Redfern. Regulators and end clients are both looking to financial institutions to provide an increasingly coherent data picture to them for reporting purposes and this in turn is compelling these firms to ask the same of their vendors.
The reference data challenge is significant after all: financial institutions need to continually maintain up to date issuer, client and counterparty reference data, and link these to other data sets, such as instruments, market announcements, corporate actions and pricing data. It is hoped that linking all this data ahead of time will allow these firms to improve competitiveness, efficiency and compliance with regulations, and enable them to rapidly respond to changes in markets and the entity concerned.
This is certainly not the first vendor partnership of its kind for either party and CounterpartyLink, for example, has inked a number of deals over the last couple of years with vendors to supply them with entity data. One such deal was signed with workflow and analytics solution provider Dealogic in February this year, under which the vendor agreed to provide legal entity data to Dealogic’s end clients for a period of three years.
When CounterpartyLink was founded in 2005 the practice of turning to external sources for cleansed entity data and verification of one’s own data was a relatively new concept, but it has now become an accepted third party service. Given the push by the regulatory community to get a better handle on the space (see the Committee of European Banking Supervisors’ (CEBS) recent guidelines on concentration risk for proof) and firms’ tightening budgets, buying in a data management solution and cleansed may be the only option for some firms.
However, CounterpartyLink is not the only contender in this space and rival Avox has been engaged in its own push this year to extend its reach in the space via partnership agreements. In May, the vendor teamed up with Cusip Global Services (CGS), which is managed by Standard & Poor’s on behalf of the American Bankers Association, to create a new universal identification system for global business entities .
Other vendors such as Fidelity ActionsXchange, which has traditionally focused on corporate actions data cleansing, have also displayed an interest in the entity data space. Regardless of whether there is room for new entrants or not in the long run, the entity data vendor space is sure to prove interesting throughout 2010.