If further proof was needed that corporate actions is big news for the vendor community at the moment, the entry of new contenders into the market is a sure sign that there are more profits to be squeezed out of the sector. Earlier this week, Broadridge Financial Services announced that it is launching a new fully managed corporate actions service and cloud services specialist Xignite has also released a new web service aimed at providing low cost actions to corporate actions data.
Both new services are aimed at specific but differing sectors of the market. While Broadridge’s service is aimed at those that choose to outsource the entire corporate actions lifecycle, the Xignite offering is aimed at the lower end of the market for smaller and mid-size firms that choose to access corporate actions data via its on demand web-based service. Broadridge is therefore entering the service provider end of the market, whereas Xignite is aiming to be a data consolidator.
Corporate actions have been a hot topic of late because of the potential threat they pose to firms’ bottom lines in terms of losses, should something go awry. The work of the Corporate Actions Joint Working Group has been vital in informing the wider financial community about these dangers and is one of the contributing factors to why corporate actions are on most risk managers’ radars. In such a cost pressured and risk averse climate, vendors are hoping to capitalise on the fact that many firms are now turning to automated solutions in this area to replace falling headcounts and better manage risk.
Portfolios today often hold securities from across the globe and each exchange uses a different standard and requirement for capturing corporate actions data, increasing the volume and complexity of the data that asset managers must track. At the same time, the credit crisis has forced companies to restructure, dramatically increasing the number of events and actions. This provides the vendor community with a great value proposition: to take away the pain of dealing with this complex data.
Broadridge’s Global Corporate Actions Solution (GCAS) seeks to provide customers with the software, infrastructure and retained services needed to support end to end corporate actions processing. The solution is based on Information Mosaic’s cama corporate actions processing engine and Broadridge’s outsourcing offering. The aim is to allow customers to completely outsource the corporate actions process, including data capture and cleansing, notification processing and calculations of entitlements.
The partnership between Broadridge and Information Mosaic is again indicative of a trend within the vendor community of a partnership approach to the market. Information Mosaic was keen to reach the brokerage community with its technology and Broadridge did not want to build a solution from scratch, so working together is one way to fulfil both these desires. John Byrne, CEO of Information Mosaic, says: “This is a very significant strategic partnership for Information Mosaic and provides a unique channel for our cama solution.”
Xignite on the other hand, has chosen to go it alone. Its XigniteCorporateActions service seeks to deliver corporate actions data as an on demand web service and leaves its customers to do what they will with the data once it has been delivered. The value proposition is that firms are then able to instantly integrate the data into their own applications without the need for any further investment in software or hardware infrastructure.
According to the vendor’s logic, its offering is in opposition to alternative solutions that require companies to load and manage their own databases from data feeds or batch files. This competitor approach leads to costly and time consuming investments in software, hardware and scarce skilled staff at a time when the market is strapped for cash, says the vendor. Xignite’s offering, it contends, means that these requirements are reduced because there is no need to manage an on-site database.
The vendor has been touting an example of a non-financial institution customer using the service in the form of virtual investment community website kaChing. The firm selected XigniteCorporateActions to accelerate development of its corporate actions automation, explains Andy Rachleff, kaChing’s chairman. “kaChing’s investing talent marketplace requires an extremely high level of financial data integrity. Our site would not be feasible without services like XigniteCorporateActions. Once again Xignite has allowed us to differentiate our service by providing information that was not previously available in a form that allows our developers to iterate rapidly,” he explains.
Stephane Dubois, CEO of Xignite, is hopeful that the solution will gain traction in the market as a result of the economic climate. “Demand for corporate actions data automation is reaching a fever pitch due to globalisation and the fall out of the economic crisis,” he adds.
Whether these two new ventures succeed in their ambitions to carve out a slice of the corporate actions marketplace is yet to be seen, but the very fact that they have hope is a positive sign that corporate actions automation remains firmly on the industry agenda.