Although Xignite is best known in the market data world, last month it stepped into the world of reference data with the launch of its XigniteCorporateActions service. Joel York, chief marketing officer, and Chas Cooper, director of product marketing, speak to Reference Data Review about their proposition to provide low cost access to vital corporate actions data.
Xignite has been on the market data scene for some time providing on demand data via the web in a service oriented architecture (SOA) fashion. The venture is privately held but backed by investors Altos Ventures and Startup Capital Ventures and is based on the west coast of the US.
At the end of last month, Xignite launched its corporate actions offering, which seeks to deliver this data as an on demand web service, much the same as its market data services. York is confident that the same approach is applicable to both market data and reference data: “We can offer these types of service for any data that is outside the remit of low latency feeds. Because it is delivered via the web, the data feeds cannot be affected by sub-millisecond latency. That is why market data and reference data are both suited to this method of delivery.”
The difference between Xignite and the competition is this delivery model, claims York. “We have the ability to serve data up on demand and users can try it, buy it and get it delivered via the internet. There is immediate and easy access to the data, users don’t have to maintain a huge database of this information: that is the initial value add of the service. Consuming and using data is much easier via the web,” he explains.
The service is therefore primarily aimed at players in the market that haven’t been able to get comprehensive access to this data before because of the work involved, the technical developments required or the expense. “Big banks may have the resources to be able to set up their own proprietary databases for corporate actions data, but smaller players may not have the scale to make this a viable option. Our service is therefore not solely aimed at the smaller end of the market but it will enable the small and medium sized players access to the data in a low cost form,” York says.
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. York is also unconcerned about the competition out there: “Most of our competitors are behind in terms of using the web for access to this data. If they do offer web access, it is part of a package rather than as a standalone offering like ours.”
The move into such a tricky area of reference data was not without its challenges, says Cooper, who worked on the project for around a year before its launch. “It is one of the biggest projects we have done and we see corporate actions as the last frontier for STP in the data world. The complexity and lack of standardisation of the data means that we have had to do a fair amount of work to get it ready to be consumed on an on demand basis,” he explains.
Cooper indicates that the team appreciated the major differences between corporate actions data and market data when working on the project. “Unlike most market data, corporate actions data is not just a flat structure. There is a great deal of complexity around linkages to other events such as mergers and acquisitions and other entities. All this needs to be modelled consistently because we are delivering application ready data rather than a simple data dump,” he elaborates.
The vendor is using a Telekurs corporate actions data feed to supply the service, rather than sourcing the data from scratch. “We do all the back end quality assurance for the Telekurs data and take the data a step further so that it is ready to be used by applications within financial institutions,” says Cooper.
The service also does not provide the data in ISO or XBRL standard formats: “We saw no need to provide the data in these formats because we have already done all the cleansing work required. Thos formats are designed to help firms deal with the issues arising from data behind the scenes, whereas we have done all the work for them.”
The vendor is keen to extend its service globally, although for the moment, its client base is largely US-based. “Europe is not that far behind in terms of clients and it is still early days for the service,” says Cooper. “Since our data source is from a European vendor, this lends itself to the European market.”
The sales cycle for corporate actions data has been longer than for Xignite’s market data products, but the vendor is getting into the swing of the pace of the reference data world. “We initially suspected that the take up of the service in the current market would be quite slow due to the economic conditions, but the global financial crisis may be helping matters. Firms are more apt to take corporate actions events in these conditions and therefore volumes have gone up, as well as the focus on risk in the market. This all means that financial institutions need automated data feeds, which is good news for us. The market seems to have created the perfect storm of risk and volume,” concludes Cooper.