Cap Gemini Ernst & Young is offering US securities houses a technology platform to enable them to meet the Securities and Exchange Commission (SEC) requirement – imposed as part of the settlement announced on 31 October – to distribute independent stock research to individual investors.
Cap Gemini Ernst & Young says its solution is designed to help the disgraced investment banks, as well as the Independent Consultant assigned to help oversee compliance in each firm, to aggregate, distribute and monitor performance of independent research in an efficient, cost-effective manner.
The new research requirement, which obliges ten major investment firms to provide retail investors with easy access to stock analysis from at least three independent sources, is part of a settlement finalized on 31 October 2003 by the SEC, the New York Attorney General’s office, the National Association of Securities Dealers and the New York Stock Exchange (NYSE). Its objective is to restore investor confidence in the integrity of equity research and to require firms to separate their investment banking and research departments.
In addition to making independent research available (via print, electronic or 1-800 call-in requests), the named bulge-bracket firms must meet other requirements that focus on such activities as the aggregation and storage of independent research and ratings, analysis of the accuracy of the independent research against other independent research providers and audit trails to track access and usage of the research.
“We’re offering a comprehensive technology foundation – including our Research Toolkit – which firms can either adopt as a holistic solution to deal with independent research or select components that fit their individual needs,” explains Petrina Dolby, a vice president in Cap Gemini Ernst & Young’s financial services consulting practice. “We’ve spent the last several months analyzing the requirements for compliance. The result is a solution that is both integrated and yet flexible enough to work with a firm’s legacy systems and its aggregation and distribution partners. We’re also offering clients the option to outsource all or a part of the process to us.”
CGE&Y’s framework covers aggregation, distribution, compliance and performance management and addresses the needs of key stakeholders with regard to the Settlement: Independent Consultants, investors, brokers, internal compliance units and research operations. The core of CGE&Y’s approach integration is a Web-hosted platform through which it builds interfaces to research aggregators and distributors, call centers, financial advisors and investor Web sites. The solution uses a Java2 Enterprise Edition (J2EE) based architecture and leverages components pre-fabricated by CGE&Y – such as application plumbing, messaging, data and enterprise connectivity), thus saving clients time and money developing their own technology from scratch.
“Our goal is to provide clients with a ‘one stop shop’ for accurate, consistent reporting tools that provide integrated, real-time systems to address compliance issues on schedule and on budget,” says Alvi Abuaf, vice president and leader of CGE&Y’s securities industry practice.