Microsoft Corp. is bringing the securities industry under its financial services computing framework.
The announcement is, in effect, an extension of what Microsoft calls Windows DNA FS-Distributed interNet Applications for Financial Services- which was introduced to banks in December at the Bank Administration Institute's Retail Delivery '97 conference in New Orleans.
Microsoft said the product would enable brokerage and investment firms to achieve straight-through processing-the automation of transactions from initiation through the end of their life cycle.
Much of securities trade settlement still requires paper forms and manual reconciliation, in part because of the incompatibility of computer systems from one firm to the next.
Windows DNA FS could be the basis of a common language by which computer systems exchange information.
Microsoft chairman Bill Gates announced DNA for the securities industry via satellite from his Redmond, Wash., office to more than 1,000 executives and software partners at the recent Financial Markets Summit in London.
Straight-through processing is seen as one of many "mission-critical" functions into which Microsoft is trying to insinuate its technology. Matthew Conners, Microsoft's marketing manager for financial services, said, "The way I view it, there is a massive problem with investment transactions from retail or institutional investors that have to be manually processed. Ideally, we could capture it once electronically."
Several processing standards are available, including Financial Information Exchange, or FIX, and the Swift international banking communications network's 500 Series, but these solve only parts of the problem, Mr. Conners said.
"What Microsoft does is take a data standard and represent it in COM (component object model), the 'plumbing' that runs Windows. We are saying that the data for trades needs to be shared," Mr. Conners said.
"The problem of straight-through processing is about integrating applications, and COM enables us to integrate, manage versions, and upgrade. It is part of our overall financial services strategy."
Lawrence Tabb, senior analyst at Newton, Mass.-based Tower Group, said DNA FS embodies a long-term Microsoft vision rather than "a set of tools.
"It's really about developing a financial services framework to make it easier to integrate products in the future," he said. "It tries to look at the integration and utilization of industry protocols in a different light."
Mr. Tabb said Swift, FIX, and other industry protocols lay out data differently and require varying interpretations, depending on which system is used. DNA FS treats the data as programming objects to unify the processing structure.
"Microsoft is trying to gather industry groups together to determine how to 'objectivize' these data and add rules to create effective data bases," Mr. Tabb said. Companies would then have a better understanding of how to interpret and process data.
"The idea of developing an object-oriented, rules-based environment in conjunction with protocols is a good one," said Mr. Tabb. "This is the first time anyone in the securities industry has been saying, 'Let's look at this differently to streamline the process.'"
