Arcontech Eyes Central Bank Data Distribution

Arcontech has already created a lightweight contribution tool─which is already in testing at an unnamed European central bank─as a bolt-on to its CityVision multi-vendor contribution system that enables firms to contribute data automatically and simultaneously to multiple vendor destinations, including Thomson Reuters, Bloomberg, Interactive Data and SIX Financial Information, in each vendor's required protocol.

The new module will enable central banks to contribute information such as prices, text-based commentary, policy decisions, interest rates, and market activity to multiple vendors, and to embargo the publication of data for a specific time. As the contributions tool is relatively lightweight, the deployment will have minimal impact on central banks' existing compliance setups, says Arcontech chief executive Matthew Jeffs.

Historically, central banks have distributed their information to one or two select vendors, who then re-sell it to end users, but this could represent a conflict of interest, Jeffs says.

"Central banks publish their information in a number of ways. Some use Thomson Reuters' contributions system, others contribute through Bloomberg. But there is some argument to say that because the information is market-moving and because those vendors resell it, should they be involved in distribution?" Jeffs says. Under Arcontech's new proposal, the vendor will act as an intermediary and manage the distribution of data to vendors and end users. "We think the distributor should be agnostic, and we are well positioned [to fulfill that role] as we have no interest in the revenues of reselling the data," he adds.

Recent scandals such as the manipulation of the London Interbank Offered Rate (Libor)─which saw banks fined hundreds of millions of pounds sterling by then-UK regulator the Financial Services Authority for misconduct relating to improperly fixing Libor rates─are leading the industry to seek more accountable ways to manage contributions, Jeffs says.

For example, some widely-used contribution systems may not have proper requirements around permissioning and establishing an audit trail of who contributes what data and when, which is driving demand for alternative processes. "One alternative is to use the internet, and another is to develop a contributions tool in-house, but that is costly, and most central banks don't have the expertise to build a multi-vendor contribution system," Jeffs says.