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Ultumus founder and CEO Bernie Thurston has spent nearly 30 years in tech and finance roles almost from the genesis of Europe’s ETF industry. He is a serial entrepreneur, having sold DeltaOne Solutions to Markit in 2015 and then sold Ultumus to SIX in 2021. His innovative instincts have shaped the DNA of Ultumus.
What sparked your interest in ETFs, tech and finance?
In 2003, Giles Sarton and I had a meeting with Deutsche Bank, which was launching X-Trackers (now Europe's third-largest ETF provider). They asked us to calculate Portfolio Composition Files (PCFs) – where Ultumus is today the largest independent provider. I spent two weeks educating myself about ETFs, determined that European investors were seriously missing out on QQQs, Diamonds and SPYs, and resolved to forge a new career in ETFs. I am proud to have been part of the exponential growth of the ETF industry over the past 22 years.
After graduating in Engineering, I swiftly moved into Chief Technology Officer roles in the City and easily transitioned to CEO roles that still major on tech – finance and tech have blurred. I was doing FinTech years before it became an acronym.
What inspired you to create Ultumus?
Just after I completed the Markit deal in 2015, I spent a year working for Invesco and realised that ETF data was not being correctly structured for umbrellas, promoters, share classes and so on. The industry needed to reinvent the approach with a pure-play index and ETF managed data service provider engineering solutions dedicated to the ETF ecosystem. I built a database at Invesco that became the prototype for Ultumus. I pitched the concept to ETF Securities founder Graham Tuckwell (who has just launched Global X ETFs Australia), and in half an hour he funded Ultumus in Dragon's Den style. The vision was so compelling that a major US bank, who had been my client at two former firms, became the first Ultumus client even before we launched a product.
What are the key ETF industry growth trends and how is Ultumus supporting them?
ETF industry assets have tripled every five years for the past five decades as investors sought lower-cost, more liquid and easily tradable – and often also more tax-efficient – vehicles. Historically, the growth was mainly due to the rise of passive index investing, but now active ETFs are also making strides. Active ETFs are growing their ETF market share and both complementing and competing with mutual funds. We have the data, experience, technology and operational infrastructure to address the special requirements of active ETFs.
Electronification should support standardisation and replace the fragmentation we see everywhere outside the US. This should also make primary markets more efficient in terms of pricing accuracy and tighter bid/offer spreads. Our harmonisation and standardisation drives enable more firms to make markets in ETFs on more exchanges and venues, which in turn widens investor access to them and attracts more assets.
Innovation encompassing new asset classes also widens the market for ETFs. We have been early movers in acquiring a growing roster of crypto and digital asset ETF clients, which also opens up digital currencies to new investor groups.
What should ETF operations and tech look like in the 21st century?
Given how huge the ETF industry is and how much more it is expected to grow market share as asset managers and investors switch from mutual funds, automation is the only solution. Manual processes, flat files, spreadsheets and accounting systems are not scalable. Smart APIs are vital to feed and update data, improve accuracy, and support faster delivery and intraday decision-making, particularly for active ETFs. Automation also supports normalisation and validation of data, which then feeds back into our harmonisation and interoperability aspirations.
How does Ultumus serve the buy side, sell side and investor service groups?
We are building Ultumus into the pre-eminent backbone of the ETF industry globally. COSMOS supports create and redeem flows globally and should become the global standard.
Whereas some other providers are only focused on issuers and custodians, we collaborate closely with sell-side AP/market maker clients as well.
We are also increasingly the engine behind white-label investor servicing platforms in addition to those who choose to publicly announce their partnerships with us.
We have taken real pride in improving the quality of data around holidays and fees, which may seem rather mundane but are precisely the sort of complex data problems that we relish. We have created solutions for issuers such as documenting, categorising, structuring and organising data around various types of holidays and fees. Holiday calendars across the industry had been a mess, but we have standardised tracking of trading holidays and PCF holidays in different countries to synchronise and coordinate workflows and avoid mismatches and delays. We are also breaking fees down into fixed fees, variable fees and transaction fees –and many other categories – to support more granular pricing models.
How is Ultumus enhancing its offering for clients and the wider industry?
We are offering more personalisation and customisation to match client formats and APIs. We are integrating data into front-office tools used by trading desks, asset allocators and portfolio managers. We are deepening relationships with ETF issuers.
We are also raising our public profile through thought leadership, lobbying and advocacy to work with regulators and industry groups to shape the future ETF landscape.
How do SIX and Ultumus work together to help each other grow?
Our corporate parent SIX is publicly listed and has revenues of over one billion dollars a year. Their size and high profile speeds up client onboarding by expediting due diligence.
Our tech team has helped to build out the SIX bulk API, supported SIX and Allfunds on ETF data, and in specialist areas such as corporate actions and sanctions data.
Ultumus also services ETFs listed and traded on SIX, which was a pioneer in Europe's ETF industry, listing its first ETF in 2000 and is one of Europe's top three ETF venues.
Ultumus data is helping SIX to break into new markets such as front-office analytics and global data distribution for hedge funds and APs in new markets in North America and Asia.
Are AI, technology and automation making people less important?
Not at all – if anything, they make the right people more important. AI and automation excel at handling repetitive tasks, data processing and pattern recognition, but the ETF industry still requires deep domain expertise, client relationships and strategic thinking that only experienced professionals can provide. Technology amplifies what skilled people can accomplish rather than replacing them.
This is very much a people business. Our team has been thrice reunited across three companies, and many of us have worked together for 20 years. We have opened new offices together in locations such as Singapore and Hawaii to extend our reach. We have been building the dream across three companies and have all bought into the idea of ETFs. We are also developing the next generation of ETF experts by hiring fresh graduates and training them from scratch – teaching them not just how to use the technology, but how to think critically about the problems it helps us solve.
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