SteelEye is building out its cloud-based data consolidation and analytics platform covering best execution, trade reconstruction, transaction reporting and record keeping, with a trade surveillance option due to go live later this year. It is also building up its client list, based on its ability to support regulatory compliance and help firms gain intelligence from their data using what it describes as ‘fair value technology, simplistically deployed’.
The company brought its data platform to market in October 2017 after five years of development and early projects with a handful of clients. The platform differentiates in providing a search database, rather than a big data database, that can be scaled up to petabytes of data and store and search billions of records. It operates as an open source Software-as-a-Service (SaaS) solution with a data lake and application programming interface (API) framework based in the Amazon Web Services cloud.
Considering the volume and variety of data that firms need to access for regulatory compliance and business purposes, the SteelEye solution consolidates all types of structured and unstructured data. It also incorporates sophisticated data modelling, which is the company’s core IP, as well as elements of business intelligence and artificial intelligence (AI) including data analytics based on deep learning. Once a client’s data is on the platform, SteelEye can build tools for the client, perhaps market abuse reports, that can then be bought by other users.
The technology stack has been built by SteelEye, with the exception of the communications recording component which is supported through a partnership with Verint Systems. The trade surveillance element is in development with the help of customers and is due to come to market in the third quarter of this year.
As well as providing scalable storage and search facilities for customers’ data, which is secured using encryption provided by SteelEye Locker, SteelEye adds other data relevant to particular use cases to the platform. Playing into Markets in Financial Instruments Directive II (MiFID II), by way of example, the platform allows customers to store, retrieve and analyse their own trading data, and at the same time access Legal Entity Identifiers (LEIs), over four million records from the European Securities and Markets Authority’s (ESMA) Financial Instruments Reference Data System (FIRDS) and Sedol data for reporting.
The company is keen to add post-trade data from MiFID II Approved Publication Arrangements (APAs), which are required to publish trade reports and provide data free of charge 15 minutes after publication, but has yet to reach a workable agreement with an APA, leaving clients paying for market data, at least for the time being.
Considering use cases of the platform beyond MiFID II, Matt Smith, CEO at SteelEye, says: “The system can handle any regulatory reporting, but customers don’t buy it just as a regulatory compliance platform, they see it as a solution that consolidates data and allows them to get real value out of their data. The inclusion of AI makes it possible to teach the system how to look for data, rather than what data to look for.”
The benefits of this approach include the ability to identify new business opportunities and observe and act on certain behaviours. For example, a CEO could ask the head of a compliance team who is working most efficiently, or a wealth manager could see which sales people are and aren’t making a lot of phone calls.
At an entry cost of about £20,000 a year, Smith describes the platform as ‘fair value technology, simplistically deployed’ and examples this with SteelEye’s ability to provide cost-effective data solutions for buy-side firms that are required to make regulatory reports for the first time under MiFID II. The company has already signed up around 20 clients and continues to add more from across capital markets. Many use the SteelEye platform for MiFID II compliance, but not all, and most are at the smaller end of the company size spectrum.
Looking forward, Smith says SteelEye is working to make the platform more intelligent and wants clients to see MiFID II as an opportunity. On a more practical note, the company is considering how to make a meaningful entry into the US market, perhaps through a joint venture or its relationship with Verint.