Compliance Newsflashes: RSA Snatches Up Competition PassMark, and more

RSA Security Acquires PassMark Security

RSA Security purchased privately held PassMark Security, a software-based authentication vendor, for total consideration of $44.7 million, which consisted of $9 million in cash and the issuance of approximately 2 million shares of RSA Security common stock.

RSA Security expects this transaction to add in the range of $4 million to $5 million in revenue over the remainder of 2006, and in the range of $10 million to $15 million in revenue in 2007.

"As financial institutions of all sizes race to address the regulatory community's guidance on stronger authentication, this acquisition—with its ability to expand the RSA eFraudNetwork, broaden our distribution network and add deep domain expertise in consumer authentication—significantly strengthens our position in the market," said Art Coviello, president and CEO of RSA Security, in a release. "Since our successful acquisition of Cyota and the great traction we are gaining in the marketplace, we have become even more bullish about our opportunity."

RSA Security believes that the acquisition will strengthen its move to establish itself as a strategic hub for the financial marketplace, providing the ability to authenticate and protect all aspects of online banking and e-commerce: end users, merchants and transactions.

Thomson Acquires Best Execution Compliance Vendor

Thomson Financial, an operating unit of The Thomson Corp. acquired privately held Market Systems, a software systems company for transaction cost analysis (TCA) and trade execution compliance. Financial terms of the transaction were not disclosed.

Market Systems provides best execution compliance technology and services to measure and audit agency trading activity, thereby fulfilling the SEC regulatory requirement to provide customers with best execution.

Market Systems will be renamed Thomson Transaction Analytics and will reside within Thomson Financial's Institutional Equities segment. Thomson Financial will retain Market Systems' management team.

Thomson Financial's strategy is to improve customer performance over the entire trading workflow, citing primary drivers for this acquisition as the ability to help clients comply with new regulatory changes, such as Regulation NMS and MiFID, as well as create opportunities for further differentiation along the whole trade cycle.

"Market Systems is the logical partner for Thomson in the institutional equities space as it has shown impressive growth, achieving the leading market position in compliance services for domestic equity trading," said Jim Toffey, president of Thomson Financial's Institutional Equities, Fixed Income and Retail Wealth Management group, in a release. "We plan to leverage Market Systems' impressive performance alongside Thomson Financial's expertise to facilitate expansion into international markets and the addition of new asset classes, together with new functionality."

SunGard's Omni and STN Ready Customers for Rule 22c-2

SunGard will provide its OmniPlus customers with an automated solution for complying with SEC Rule 22c-2 in advance of the SEC deadline. The SunGard Transaction Network (STN) 22c-2 Services, in conjunction with the OmniTrade Standardized Data Reporting (SDR) product, provides a process for responding to fund company requests for historical, detailed trade activity. This solution for Rule 22c-2 compliance will be available to SunGard customers, including those that do not currently use OmniTrade or STN for trading purposes.

The SEC adopted Rule 22c-2 in May of 2005, allowing fund companies to request historical participant level trade activity from record-keeping intermediaries that produce omnibus trades to research potential market-timing violations. The rule goes into effect October 2006. SunGard has developed a full-service, ASP solution, STN 22c-2 Services, that will be integrated with a number of trading systems, including OmniTrade.

"The SEC rule creates the potential for significant data transmissions to occur between fund companies and our customers' record-keeping operations," said Don Mackanos, president of SunGard's Omni business unit, in a release. "The combination of new Omni functionality and STN 22c-2 Services will help our customers handle the intricacies of these new demands by storing, tracking, processing and reporting on detailed trade information."

Leveraging its network connectivity model, STN 22c-2 Services can help Omni customers achieve a straight-through processing environment for complying with fund company requests for trade details. STN 22c-2 Services include secure data storage of participant-level trading activity, advanced analytics, automated communication with fund companies and administrative tools over a single, Web-based interface. Customers also have the ability to store participant-level trading activity on-site and transmit an interface file to STN in response to fund-company requests.