German data agency WM Datenservice has over the last quarter introduced a data feed service to offer clients a greater degree of flexibility in accessing WM’s reference data and improved timeliness to near-real-time data delivery.
The new Financial Object Feed (FOF) is in part a response to the growing trend within the German market of moving to global software applications from in-house applications at financial institutions. Says Georg Eisel, managing director of WM Datenservice, “The increasing use of international software has meant we have had to adapt our previously domestically oriented services to work with international processes being adopted by our clients.”
The feed, incorporating XML technologies, enables clients to match ‘content objects’, such as specific corporate actions or reference data groups, with ‘function objects’, such as a risk management or reporting functions, says Eisel. It also improves on the existing once-a-day batch file delivery by providing near-real-time data as, says Eisel, clients are now requiring data as soon as possible in order to flow through increasingly real-time and automated processes.
FOF is being offered as an additional delivery mechanism alongside its existing batch file-based services and WM does not intend to push clients to migrate. The pricing will also remain the same as clients are charged for content rather than the delivery mechanism. Eisel says that some clients are already running both services in parallel.
The FOF feed is based on WM’s new relational database Wertpapier Management System (WMS) developed internally, which incorporates WM’s new data model, FiOM (Financial Object Model). This new database provides enhanced data management and quality-checking tools as well as storage and structure to enable a higher degree of data granularity.
WM felt such developments were necessary to keep up with the changes in operational processes within its client firms. As well as the move towards more international software applications, the changing EU regulations is having a ‘huge impact’ on WM’s business. According to Eisel, “The EU regulations are resulting in a restructuring of financial institution’s workflow processes. As this happens, they require more and more granularity in their data sources, which is why we have established our new data model.”
Another new trend is the outsourcing of securities transactions to so-called transaction banks, such as TxB, e.t.b., and DWP Bank as well as the new T-Systems. These new entities require data, opening up a new market for WM’s data services. Here, WM’s has instituted a new data pricing structure based on the clients’ reported transaction volumes. At the same time, as the traditional banks outsource their transactions, they are able to focus more on value-added functions such as asset management or risk management, also impacting on their data needs, according to Eisel.
Globalization has also impacted WM’s business, as its domestic clients, particularly in the fund management space, require increasing amounts of international data. Here, WM expands its international data sources through working with the local exchanges, national central depositories, the national numbering agencies, newspapers, and specialist information providers, as well as some larger information providers.
Likewise, international investors require more regional data. WM will continue to focus on servicing its domestic clients directly and does not intend to establish itself in other regions like France or the U.K., but sells its data to clients within these regions remotely and through partners.
Other product enhancements at WM include the recently launched daily fair value pricing for German shares. With eight stock exchanges in Germany, there is a need for a fair value price for shares trading on those exchanges. WM has previously offered annual and then quarterly price updates. Says Eisel, “Clients want more transparency on how a value has been selected and so we are making our methodology accessible.”
WM also recently introduced daily updates of evaluated prices covering Germany’s 60,000 bonds in its Uniform Valuation Prices service. An average of just 300 of these bonds are traded each day, making it a very illiquid market so WM sees a lot of potential in providing evaluated prices.
Within the German market, WM is seeing more competition from the local and global depositories, the banks themselves, and the Deutsche Borse exchange, which is gearing up to launch its Propris product line, the first fruit of its new Back Office Services division (see Reference Data Review, November 2004).
As well as providing data services, WM is heavily involved in various industry standards initiatives. It is the German national numbering agency and allocates WKNs and the corresponding ISINs for German securities through ANNA, and works closely with ISO, International Securities Services Association (ISSA), Deutsches Institut fur Normung (DIN), and the Financial Information Services Division (FISD).