IBS Journal March 2015
Smartstream buys IBM’s collateral management system
Smartstream has bought the rights to IBM’s Algorithmics-derived collateral management system for an undisclosed amount. The solution will be rebrand- ed as Transaction Lifecycle Management (TLM) Collateral Management and will reside with the rest of the new owner’s trade lifecycle offerings. On the face of it, the timing of IBM’s decision is a surprise, given the amount of collateral management-related activ- ity in the market at present. IBM bought Algorithmics for $387 million in 2011; Algorithmics had previously bought col- lateral management system supplier, Sen- try Financial Systems, in 2000. The system that Smartstream has acquired stems from Sentry. IBM did not seem to be gaining much
traction with the collateral management system in the face of new enterprise-wide requirements. In 2010, Algorithmics claimed 78 users of the system; today, that number is put at 70. There have been some replacements, to the likes of Calyp- so, Lombard Risk and Sungard. The cus- tomers are mainly large banks plus some fund administrators that provide the solu- tion for their clients. IBM was proactively seeking a buyer
for the solution. Smartstream constitut- ed a good partner, says Smartstream CEO, Philippe Chambadal, with a number of clients in common – ‘we know the prod- uct well’ – and with no competing offer- ing. Smartstream’s EVP, product manage- ment, Darryl Twiggs, says the product didn’t really fit with IBM’s operational portfolio as it is mainly front and middle office in focus. IBM issued this statement to IBS: ‘IBM continually manages its port- folio by identifying and divesting non- core, non-strategic areas within our busi- ness. With this transaction, IBM will fur- ther increase its focus and investment on risk analytics solutions and continue to leverage IBM’s big data and analytics and cloud portfolios for broader risk architec- tures and solutions.’ Collateral management had been
on Smartstream’s radar for some time, says Chambadal, and this was an excel- lent chance to move into the sector. The
© IBS Intelligence 2015
Philippe Chambadal, Smartstream
supplier’s reconciliation and exceptions management software will plug in to the acquired solution via an ETL layer. In addi- tion, as with its other applications, Smart- stream will fairly quickly offer the collater- al management system on a utility basis, says Twiggs. It has already done this for reconciliations, fee and invoice manage- ment, reference data management and corporate actions processing. ‘We have externalised these as services and think that collateral management is absolutely ripe for this as well.’ He expects availabili- ty during 2015.
IBM had been overhauling the solu-
tion and there are now a number of new components, including a client portal. Smartstream is gaining around 50 staff with the acquisition, including a devel- opment team in Philadelphia, plus sales, pre-sales, and services staff. Smartstream is owned by Dubai
Investments, an arm of Dubai’s Interna- tional Financial Centre, and was, itself, up for sale in 2010 but nothing came of this. The vendor did its own divesting of portfolio in 2013, when it exited the trade finance software space and sold its TLM Trade Finance business to specialist Surecomp.
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