Omgeo, trying not to betray its schadenfreude as the GSTPA sinks beneath the weight of its own pretensions, today published a report on its own progress in revolutionising global trade matching. It does not amount to much.
The DTCC-Thomson ESG joint venture says the number of daily trades processed has jumped by a fifth, though it is not saying since when, or from where. Equally mysteriously, Omgeo is not saying where the 730 “new client contracts” came from, or when they arrived. However, the fact that Omgeo managed to return a dividend of US $20 million to its two parent companies suggests that, if GSTPA had the best technology with the TFM, the Omgeo Central Trade Manager (CTM) is not running out of money.
Whether a $20 million dividend reflects success with clients is another matter. So far, Royal London Asset Management and Deutsche Bank Global Fund Services remain the only two clients to have gone live with the CTM – out of 55 clients that have signed up for a service which Omgeo now describes as “evolutionary.” The chief benefit experienced by the pair so far, says Omgeo, is a fall in the time taken to deliver settlement instructions fro an average of 20 hours to an average of 2. So much for dramatic falls in costs and risks.
But even this reads like a substantial achievement compared with the other signs of progress itemised by Omgeo. A review of code of practices of Omgeo OASYS GlobalSM for Japanese domestic trades does not sound particularly meaningful, though Omgeo says this curious beast has over 20 live clients. Equally, the fact that Omgeo has introduced OASYS-TradeMatchSM to the US market is merely a reminder that it can spatchcock together existing products developed by its parents. Omgeo says using existing products in this way builds “stepping stones” for clients wishing to move to Omgeo CTM.
“Omgeo is extremely pleased with the milestones we have achieved with the industry throughout the past year,” says Adam Bryan, President and CEO of Omgeo. “It is through this dedication, client participation and partnering effort that Omgeo is able to deliver real value to the industry in the form of actual cost savings. As we embark on 2003, Omgeo will continue to enable the global securities industry to realise improved operational efficiencies, reduced costs and a return on STP investments.”
With GSTPA out of the way, the major challenge facing Omgeo is its own complacency. Even Omgeo would accept that the TFM is a better piece of technology than the CTM, and it is now available for purchase by a competitor, which may or may not include the former TFM operator, SunGard. However unfair the caricature, Omgeo has yet to shed its image as a composite of Thomsonesque commercialism and DTCC do-it-this-way-ism, especially among its most inveterate opponents and important connections with fund managers: the custodian banks. Now, between the death of GSTPA and the rise of more effective competitors, and especially at a time when fund managers have made clear they expect the custodians to pay for luxuries such as the CTM, is the moment to do it. It may not come again.