This Week: SimCorp/Venn; MSCI index tech M&A; Citi ETF API & more

Headquartered in New York, Venn is a fintech spin-off from quantitative hedge fund Two Sigma. Venn’s clients include asset owners, wealth managers, advisers, and consultants of all sizes. Venn’s multi-factor risk analysis platform serves a variety of traditional workflows, including portfolio analysis, manager due diligence, scenario analysis, proposal generation, and performance reporting.

Under the new partnership, Venn’s clients will benefit from equity risk factors derived from the latest version of the Axioma US Equity Factor Risk Models, alongside the Worldwide Equity Factor Risk Models within Venn’s 18-Factor Lens. The combination of Venn’s tools and quantitative approach, along with analytics from Axioma, is designed to enable investors to quickly understand the impact of risk and expected returns in a constantly evolving environment.

Eurex to launch first Total Return Futures on MSCI indexes

European derivatives exchange Eurex is extending its Total Return Futures (TRF) segment through a cooperation with MSCI.

Scheduled for March 11, 2024, the derivatives arm of Deutsche Börse Group plans to launch TRF contracts on three MSCI indexes: MSCI World Index, MSCI EAFE Index, and MSCI Emerging Markets Index. The launch reflects Eurex’s commitment to provide solutions that support the global shift from swap instruments towards listed and centrally-cleared derivatives.

The new contracts will cover the net return versions of the following indexes: MSCI World Index (TMWO), MSCI EAFE Index (TMFA), and MSCI EM Index (TMEM). The TRFs will be denominated in US dollars. The underlying benchmark US funding rate is SOFR (Secured Overnight Funding Rate). For technical reasons, they will initially be available during US trading hours (14:30 – 22:00 CET, 08:30 am ET – 04:00 pm ET). Expansion to European morning and Asian trading sessions is planned later in 2024.

TRFs’ objective is to replicate the returns of traditional bilaterally negotiated equity or equity index-based swaps. However, compared to swaps, central clearing enables portfolio margining, simplifies settlement, and mitigates counterparty risk.

The new TRF contracts complement Eurex’s existing TRF suite, which includes benchmark Index TRFs, individual Equity TRFs and Basket TRFs.

MSCI expands custom index offering with Foxberry buy

MSCI has also signed a purchase agreement to acquire Foxberry, a London-based provider of front-office index technology for investors.

Foxberry was founded in 2014 with the mission of building and delivering tech-driven investment solutions. These solutions are enabled by Foxberry’s Foxf9 platform, an index and analytics platform designed to tackle the most complex index construction and risk-modeling applications. The platform focuses on index and strategy creation through customization, back-testing and simulation capabilities, sustainability criteria, and reporting. 

The strategic integration of Foxberry and the Foxf9 indexing and analytics toolset will strengthen MSCI’s existing suite of index customization solutions. By providing a new client-centric, interactive experience, MSCI will further scale its ability to deliver client ideation through simulation and analysis and introduce new features relevant for a wide variety of investors.

Citi enhances ETF servicing capabilities with FIX API connectivity

Citi Securities Services announced the launch of Financial Information eXchange (FIX) API connectivity on ACES, the bank’s online, global ETF portal that automates the ETF process.

Born out of a successful client pilot, the new integration offers simplified order management and onboarding. Authorized participants are now able to connect directly to the ACES platform and manage ETF share creation and redemptions more efficiently. 

FIX refers to a communications protocol for the international real-time exchange of securities transaction information. The protocol is used by the FIX community, which includes close to 300 member firms.

“With the ETF industry’s move to T+1 looming around the corner and the push for digitization, this enhancement comes at an opportune time. By integrating ACES with the FIX protocol, we are unlocking scalability and efficiency not only for our clients, but all ETF market participants,” says Paul Spyropoulos, ETF product manager at Citi Securities Services.

In a T+1 settlement environment, managing differences between settlement and subscription cycles will be a priority. The FIX API connectivity will help to improve market timing and reduce operational risks, while enabling further automation within ACES ETF processing.

Citi’s ETF servicing model leverages the bank’s global footprint and expertise delivered through modern and scalable technology to provide custody and fund services. 

3di and Element22 offer market data commercial management eco-system

3d Innovations (3di), a data management products and services vendor, and management consulting provider Element22 are combining their strengths to help CIOs and CDOs at buy- and sell-side firms to modernize and optimize their market data commercial management operations.

To help financial institutions respond to an evolving data landscape, the latest version of the 3di Profiler API, a web-based industry intelligence tool, now supports content integration with Element22’s cloud-based service and data sourcing management and optimization product, Benzaiten.

As part of this strategic partnership, cross-functional teams within firms can expedite contract and vendor management, optimize inventory management, market data cataloging, and data glossary implementations, or any area within the data supply chain that requires technical, risk, and compliance or business operations teams to collaborate.