New York – At the Investorside Independents’ Day Conference last week, we took some time to look around at the exhibitors. One of the compelling services was Norbury Financial, which is a research management software provider. So it was not a major surprise to hear news that Norbury Financial Systems teamed up with agency broker Institnet. The news, released Wednesday, is interesting and expected at the same time: Expected, not in the actual matching of the two firms, but in the matching of the capabilities of the two firms. This is a growing trend that will continue to gather momentum in coming months. In addition, Norbury has inked a deal with Paris-based Linedata Services. Linedata’s OMS, called LongView Trading will have hard links to the Norbury’s RMS.
As usual, the Investorside connference is a good leading indicator of M&A in the buy-side services area. Norbury was an exhibitor at Monday’s conference for the first time and was subsequently announced to have been snapped up by Instinet. Two years ago, Convergex showed up on a panel and was subsequently snapped up by BNY Jaywalk. (incidentally, Tamale and Jaywalk announced today that clients will be able to manage Jaywalk data within Tamale – more on this Monday).
The general trend here appears to be for service providers to the buy side to increase the depth and breadth of their offerings. For the brokers, this means that adding third party research, research management systems and commission management systems to increase the attractiveness of the brokers and to increase trade flow. We saw Merrill Lynch get into the alternative research space this week. But it is not just the brokers who are thinking strategically. Coleman Research Group announced early this month that it had purchased a research management service called Clio from a hedge fund.
The expected consolidation of alternative research, research Management software/systems, order/commission management systems will be a salient feature of 2008.
We include the press release below:
Instinet Inks Distribution Deal With Norbury
April 9, 2008 By Alexa Jaworski
Agency brokerage Instinet said today that it has entered into a partnership with Norbury Financial Systems, a Boston-based research management software provider. Under the deal, Instinet’s research sales group will distribute the Norbury Links research automation platform to its institutional clients.
Analysts and fund managers use the subscription-based Links as a central repository for in-house and third-party research. The platform allows users to store information such as e-mails, contacts, notes, transcripts, spreadsheet models and market data and tag it for easy retrieval and real-time collaboration, says Norbury.
It is New York-based Instinet’s first such agreement with an entity that is not a content provider, said John Pitt, research director of Instinet Research Partners. Pitt noted that his division’s core strategy is to sign exclusive distribution agreements with independent research providers. “We’ve built up a presence in the marketplace amongst buy-side institutional portfolio managers and analysts, and we’re in a unique position to sell” Links to that marketplace, said Pitt. “But more than anything else, we thought it would be helpful to our clients.”
Norbury’s co-founder and CEO, Dan Dykens, explained that his company will be “leveraging Instinet’s internal sales capability and leveraging their connections with portfolio managers, traders and analysts to sell our software.”
Dykens said that “the deluge of information in the marketplace has become increasingly overwhelming to portfolio managers and analysts from institutional clients of all types. Norbury Links helps to mitigate this overflow by automating the research process, which helps institutional investors focus on key investment intelligence.”
When Norbury, which was founded in 2005, has established a strong presence on desktops, it plans to launch an independent research distribution platform, which is already being developed, said Dykens. “We will then be in a very unique position where if clients want this … we know what research is important to them and we can filter through the universe of independent research and promote independent research for sale and start to change the way [it] is distributed by really promoting an a la carte model to the buy side.” Though Norbury is building the platform on its own, revenues will be shared with Instinet.
The distribution agreement with Instinet is “a bit of a ‘Trojan horse’ approach,” said Dykens. “Once we have lots of desktops we can start to promote independent research directly to the end user.”
Instinet’s Pitt noted that “in becoming involved with Norbury, we are taking an option on that second phase of development. And if the research distribution platform is developed and successful we’ll be in a very good position to make an important contribution to that and to benefit from it, because we do have extensive contacts in the independent research industry.” Though the potential development of the distribution platform is included in the deal, the details have not yet been worked out, said Pitt.
Michael Plunkett, president of Instinet North America, added in a statement that “there is more high-quality research and other information available to portfolio managers and analysts than ever before,” and that the industry’s challenge is “to efficiently manage and organize this information flow so it can be leveraged firm-wide. We believe Norbury Links is a superb solution and that our research clients will find much value in it.”
On Monday, Paris-based Linedata Services also said that it is offering clients of its LongView Trading order management system (OMS) access to Norbury Links. The alliance will help Norbury further expand its reach–LongView customers include ten of the 25 largest asset management firms.
“Although LongView OMS handles all the workflows in the trading process, there are a number of labor-intensive tasks that go into making the overall buy or sell decision,” said Jack Wiener, EVP in charge of business development at Linedata in North America. “Our alliance with Norbury should be a huge value-add for clients, reducing the paperwork, e-mails and information overload around identifying, sourcing and accessing relevant investment research.”