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Talking Reference Data with Andrew Delaney: Is Lance Uggla the New Michael Bloomberg?

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No, he’s not running to be mayor of New York, as far as we’re aware. But he is leading a company that has pretensions for the No. 1 slot in financial information and infrastructure. That’s our conclusion from recent events at Markit, and the growing swell of talk about what’s to come in the not-too-distant future.

Uggla is, of course, CEO, as well as significant minority shareholder, of Markit. If you’ve visited their offices lately, you’ll know that the company seems to be trying to out-Bloomberg Bloomberg, in a manner that’s perhaps more appropriate for today’s austere mood.

But more significantly, Markit seems to be in the midst of a number of potentially structural market changes that could see it emerge as the major financial technology facilitator. And that may well be what its financial institutional owners want. Moreover, given recent events, Markit seems to be in an acquisitive mood. And it appears that plans for future funding are already in place.

These have been tough times for the two largest players in financial information: Thomson Reuters and Bloomberg. For many in the financial data space, Thomson Reuters’ investigation by and subsequent settlement with the EU over market dominance of its Reuters Instrument Code (RIC) looked set to be the catalyst for a massive shift to Bloomberg and other providers.

Freed from the restrictions of the RIC, the logic went, firms would jump ship in droves, to Bloomberg with its BSYM identifier, which has also been adopted by the likes of NYSE Technologies, and to other providers adoption of whose services became more risky when mapping to the long-embedded RIC was a necessity.

The PR disaster that followed revelations that Bloomberg News journalists used their Bloomberg terminals to snoop on customers appears to have put paid to that idea. Bloomberg’s faux pas has seriously dented client relationships, as evidenced by the high-level ‘discussions’ CEO Dan Doctoroff undertook with his counterparts at key clients like Goldman Sachs and others in order to quell the dissent.

In the midst of all this, Markit was making moves to expand, and to secure funding that could be used for future expansion. As readers of this column will know, Markit took a long hard look at Asset Control, a major player in the enterprise data management space, before deciding against a transaction, and more recently acquired the Global Corporate Actions Validation Service (GCA VS) from DTCC.

At the same time, it secured $500 million of funding from Singaporean sovereign wealth fund Temasek, which acquired 10% of Markit for a reportedly $5 billion valuation. And just the other day, Reuters reported on the rumour that’s been doing the rounds for quite some time in London at least: That Markit is preparing for an IPO in 2014.

What does it all mean?

In short, an acquisitive, well-funded Markit looks set to exploit the travails of its most serious competitors. There are many theories of how Markit will flex its newly found muscle. Our favourite assumes that the coincidental desire of NYSE Euronext to divest of its underperforming NYSE Technologies unit could provide Markit with the kind of package that would allow it to compete with Thomson Reuters and Bloomberg on a whole host of levels, including market data, data feeds, FIX messaging and reference data management.

In particular, we are interested in how Markit might leverage NYSE Technologies’ ongoing efforts to create a utility-like managed service for reference data, which we hear has a number of key players committed, among them possibly some Markit shareholders.

It will be worth keeping tabs on Markit’s movements for the remainder of the year. If Bloomberg has been our market’s darling for the past decade, it seems that Uggla has his eye on assuming the mantle for the next one.

Who knows, maybe mayor of New York is in his plans after all.

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