Frankfurt-based investment technology platform BITA plans to disrupt the indexing industry with the release of its cloud-based,
Set to launch in Q1 2020, BITACORE will enable clients to design and construct their own indexing strategy as well as being able to perform a backtest with 15 years of available data.
Sourced from a variety of origins, BITACORE's available data covers corporation actions, environmental, social and governance (ESG), sector and thematics, classification and factor as well as the option for the user to include their own data.
BITA hopes to utilise the growing adoption of the index industry within the passive investing space over the last decade. The industry’s revenue grew 13% last year with roughly three million indices being calculated worldwide.
The platform’s business model is based on software fees rather than index licenses which eliminates the traditional assets under management-based pricing.
While BITACORE is set to launch early next year, the platform will be rolled out to selected institutions in the upcoming weeks for beta-testing.
Is self-indexing the solution to index providers' high fees?
Victor Hugo Gomez, founder and CEO of BITA, commented: “We are changing the dynamics of the index industry with the intention of giving our customers total flexibility and control.”
Gomez (pictured) looks to reduce the costs in data operations, data management and index licensing for users while offloading index administration onto BITA's platform but retaining full intellectual property rights.
BITA’s client base includes both institutional investors and asset managers. The latter can develop new passive products and test potential investment ideas whereas investors can customise benchmarks that fit their investment objectives.
“DIY indexing is gaining momentum as several index providers are releasing tools for making customisation easier,” Gomez continued.
“However, all these applications are very restrictive and limited as they force the customer to relinquish ownership and exclusivity while still paying high index licensing fees to those providers.”
Other disruptors have noticed this gap in the market with Index One launching a similar platform for asset managers to create bespoke indices.