Vendors Lay Out Their Plans for Reference-Data Services
IBM Seeks to Partner With Customer
Meanwhile, IBM is having conversations with many firms on Wall Street about creating a managed service for reference data that would combine the securities firm's process or technology with IBM's own experience in outsourcing. "I think IBM is very open to all sorts of arrangements, and the arrangements become very specific to the process and the Wall Street partners that would be involved," says Lee Spirer, financial markets leader, IBM Business Consulting.
For reference data and security data, there is a high likelihood that one of the tenants would have to contribute its expertise or its data to seed the offering, says Spirer.
In its consulting practice, IBM has people who are very well-experienced in reference and data and have managed that before, and who assist clients with their internal decisions and selection of data vendors, says Dessa Glasser, managing director of business development for strategic outsourcing at IBM Business Consulting.
As the world's largest provider of process outsourcing, Glasser says IBM can take advantage of its sheer scale and global footprint, as well as tools from its research labs and technology from its on-demand centers. IBM does a fair amount of work for banks in India that it can leverage, and it also has big centers in Brazil, Calgary and China. From its research labs, it has a search algorithm called Web Fountain that it may use for anti-money laundering, and IBM has a learning tool it can leverage -- if there is a problem with a particular security and it happens a number of times, it will prompt the operator to say this has happened three times and ask, "Is this the correction you want to make?"
Glasser says IBM can use its own technology capabilities or on-demand data centers. Or, if the client wants one-off outsourcing, pointing to the firms' Dresdner Bank model. The German bank outsourced 25 of its employees to IBM, which now runs a utility known as the Greenwich Project for processing "derived data." IBM collects real-time data throughout the day, cleanses the data, checks for accuracy and massages the data in preparation for use in proprietary risk analytics and compliance purposes. "We'll derive the data into economic curves for downstream risk analytics as well as compliance," explains Spirer. IBM says it's talking to other German clients about joining the platform and sees potential for expanding the model to the U.S.
Even if vendors set up a managed service and achieve industry cooperation, customization will be necessary. The challenges the vendors must face include maintaining the clients' preferences for customized business rules to cleanse the data and create the golden copy or composite feed.
IBM's Glasser points out that every financial firm will have its own version of the golden copy and that vendors will have to accommodate that. "It's not just the data model, it's the tools, it's the cleansing process, it's the ability to gather the information, normalize the data. There are numerous steps in the process," says Glasser. "You'll find some vendors have strengths in their underlying data model, some have strengths in pulling the data in and cleaning in, and that's why integration is crucial," adds Glasser, who contends that IBM's strength is bringing data into clients and doing seamless integration.
Whether or not the managed reference data service materializes, vendors say there appears to be enough business to go around. SunGard's Richards says that with a $6 billion market opening up, there's room for a managed service, one-on-one outsourcing situations, a scaled down utility and sales of enterprise software. "There are many initiatives to soak up this opportunity," he says. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio
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