What’s New In The World Of Fixed Income Analytics?
The adoption of mobile technology has become the standard for most financial services business lines. But a segment of Fixed Income is missing out on the party, and they don't seem to mind.
"Because portfolio management decisions are more medium to long-term there's not as much demand for that kind of [real-time] access," says Andrew Hausman, president of BondEdge Solutions, an Interactive Data company that provides reference data for fixed income portfolio managers at more than 400 leading banks, investment managers, and other financial service professionals. “Our customers aren't sitting in a taxi and changing portfolios on their phones, that's not how it goes."
In an attempt to enable mobile adoption, BondEdge's hosted solutions platform is designed to be fully functional on a mobile device, but Hausman says there doesn't seem to be an overwhelming demand for it outside of the PC. "It surprises me a bit because everything else is going that way, but the nature of portfolio management is not really done in real-time with urgency. People like to know the news and the market in real-time, but in terms of the service we provide, so far it's not moving away from the PC like a lot of other things."
[For more on the drastic changes in the fixed income space, read: The Big Shift: Overhauling Corporate Bond Trading.]
After all, he explains, users would be looking at a ton of numbers, charts and complicated math, which doesn't lend itself to the device. "Tablets are in the middle, our hosted solutions works and looks fine on them. I'm sure some people use it, but it typically does not come up in sales meetings."
Driving Security & Prioritized Demands
Clients may not ask for mobile features, but they haven't held back from numerous request related to product offerings and security. As Hausman explains it, the fixed income market is going through a tough year, causing clients to look beyond their usual markets in search of yield. The aggressive push can be as simple as trading bonds with more risky credit ratings, entering emerging markets, or even equities. Whatever they choose, the community is demanding broader instrument coverage and analytics to beat their benchmark and fund liabilities.
A Demanding Business
Unlike any time in their 30-year history, BondEdge is experiencing a trend of fixed income managers requesting more and more custom analytics in order to meet their benchmarks. According to Hausman, clients used to be content with daily/weekly/monthly packages of data values. Now, for whatever purposes, clients are asking for information in real time, coming back again and again with requests for different data sets and conditions. This is "because they are using our data in other applications they expect us to provide them data quickly," says Hausman. "They expect us to run calculations behind the scenes we normally wouldn't be asked to do in a couple minutes. There's a definite push for speed."
To put this in perspective, a client with a lot of portfolios will ask what happens if they do an interest rate shock test across their 300 portfolios, and they don't want to wait long for an answer. A lot of math is being done in a short amount of time, pushing harder on their servers to perform quickly.
Cloud Security
Like others in the financial service industry, BondEdge's software is offered as a deployed solution or as a hosted solution. Hausman says most of their new business partners prefer the hosted solution, but that comes with a slew of security concerns about hosting client data. "It’s funny," he says "Storage has gotten cheaper, but some of this other stuff has not, just because the bar is higher. Clients used to take the hardware and were happy. Now we’re getting into a lot more of a dialog with CTOs about the best way to take the service… They come to us and ask, 'Do you do this? Would you buy this technology on our behalf?' so they're definitely driving us to the level of security they need."
Flexibility
As customers move into new fixed income territories they can benefit from the expertise of those who covered the area before them. With client approval, BondEdge has opened up its system so clients can use someone else's data and analytics. For example, many use Intex’s cash flow data because the way they deconstruct structured products is unique. Another big name is Andrew Davidson & Company, which provides unique data- prepayment instruments.
"People want flexible systems," says Hausman. "We're supplying solutions with our service, but if you want to use Intex input, we're opening up the system and saying, you don't have to use ours, you can use theirs … That was a popular direction, because clients want to pull things differently and they want to operate with inputs they like." Becca Lipman is Senior Editor for Wall Street & Technology. She writes in-depth news articles with a focus on big data and compliance in the capital markets. She regularly meets with information technology leaders and innovators and writes about cloud computing, datacenters, ... View Full Bio
Tweet This