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Fighting Back?

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The mood in the industry this month seems to be one of serious assertiveness. Not only did market participants give a piece of their minds to data vendors at the bi-annual World Financial Information Conference (WFIC) in Athens, early in October, but the EDM Council also saw an uprising of sorts against the proposals surrounding the establishment of a National Institute of Finance (NIF) in the US market.

A-Team Group CEO Angela Wilbraham came back from Athens reporting that many attendees from the user community were particularly vocal about their dissatisfaction concerning the levels of service and value for money they are receiving from their vendors. The overall theme for the event, which was organised by the Financial Industry Services Division (FISD) of the Software and Information Industry Association, was managing costs in troubled times (a common theme since the financial crisis hit) and these comments were in keeping with this notion.

One senior data manager’s warning to data vendors was reflective of the general feeling from the delegation, said Wilbraham. He indicated that his financial institution was keeping a close eye on which vendors were making an effort to cut their prices and those that weren’t. “We’ll remember the data vendors who work with us and share our pain, and we’ll remember those who don’t,” he warned.

This suggests that customers that do not feel they are getting their money’s worth will vote with their feet. So, firms have their naughty and nice lists ready for renewal time, but what of the vendor reaction? Unsurprisingly, these comments did not go down well with the delegates from the vendor community, who felt that competitive forces have kept their prices in check and indicated that they have, in fact, been going that extra mile to meet their customers’ needs. According to Wilbraham, one vendor facetiously suggested that perhaps the financial institutions would like to share their profits when they have an upside. However, this tension is not just between the vendors and their customers. The news that the European Commission is investigating yet another data vendor around their pricing practices for proprietary data codes is proof that regulators are also keeping an eye on the vendor community and the competitive forces therein.

Earlier this year, the Commission launched an investigation into the pricing for Cusip Service Bureau’s International Securities Identification Numbers (ISINs) for North American securities; now the regulator has another data vendor in its sights: Thomson Reuters. The Commission is reportedly (it hasn’t yet officially confirmed this fact) investigating the vendor’s licensing policy for its Reuters Instrument Codes (RICs). Last month, the regulator sent out questionnaires to a range of Thomson Reuters’ clients aimed at finding out more about the vendor’s RIC licensing fees and customer usage of these financial instrument identification codes.

On the EDM Council front, discussions during the quarterly London meeting centred on attendees quizzing the feasibility of establishing the NIF, which is aiming to provide a repository of financial transaction and entity position data, as well as an analytics layer on top.

Many attendees were unsure about the idea because of the problematic political aspects of establishing such a utility based in one country. Some were also sceptical about the value of such a utility to the market, when financial institutions are required to do these kinds of analytics every day anyway. It seems that the market is more willing than ever to speak up about issues that it deems to be of sufficient importance. To this end, our monthly poll on the European Central Bank’s reference data utility proposals is closing soon, so make sure you let us know whether you think it’s a great idea or it’s doomed to failure.

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