Fidessa’s buy-side revenues decline as firms choose to outsource

Fidessa's buy-side revenues are down 3% as firms look to outsource operations to larger buy-side firms.

Fidessa announced a 3% decline in buy-side revenue due to increases in restructuring, closures and outsourcing within its buy-side client base.

Its annual results reported recurring revenue in its buy-side business unit of £16.7 million in 2015, down from £17.2 million in 2014.

The software and services firm pointed out mid-tier buy-side firms have been outsourcing operations to larger buy-side firms, harming its sales figures.

The report explains as pressure increases on in-house developments and the bar is raised for firms looking to provide solutions to the market, regulatory and management risk continue to come under scrutiny. 

Fidessa explains it expects to benefit, “as firms look to move away from their in-house developments,” claiming it is one of the increasingly few vendors with the scale and infrastructure to handle these compliance demands.

Restructuring and closures and were also listed as reasons behind the decline in buy-side revenues in 2015.

The vendor said in its report: “Fidessa has maintained its buy-side investment, focusing this into specific areas to address particular challenges seen within the industry.”

The firm is anticipating further closures and consolidation during 2016, but believes this will reduce as markets stabilise.

Chris Aspinwall, chief executive officer at Fidessa commented: “As we move into 2016 the recent movements in the financial markets clearly demonstrate the challenging environment in which our customers are still operating.

“Despite this, we still expect themes we have seen in 2015 will continue, with more opportunities opening up as our customers position their businesses for the future.”

Across all asset classes, Fidessa pointed out that: “the market is moving towards service-based offerings” and “there are only few vendors capable of meeting customers’ business requirements.”

Fidessa also reported its derivatives business unit and multi-asset initiative are “on track to achieve profitability” within the next three years.

In December last year, Fidessa announced the appointment of Paul Dex, who became business development manager for its derivatives business unit.

Dex previously held senior roles in derivatives, most recently managing director of financial product development at BNY Mellon.