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A-Team Insight Blogs

Talking Reference Data with Andrew Delaney: Live and Let Die

(With apologies to Paul McCartney and Ian Fleming)

When you were young and your heart was an open book

You used to say ‘live and let live’ (you know you did, etc.).

But in this ever-changin’ world in which we’re livin’

Makes you give it a try: ‘Live and let die’

When I was young and my heart was an open book – sadly, some time ago – I used to consider it a front-office, real-time market data world, dominated by Reuters, Telerate and – in my case – the London Stock Exchange’s Topic. Later, it was dominated by Micrognosis, Reuters Topic, Teknekron Software Systems (now Tibco), and finally by Thomson Reuters and Bloomberg.

But in this ever-changin’ world in which we’re livin’, it’s no longer about front-office, real-time data. It’s about something I call enterprise data. And where in that world we all used to say ‘live and let live’ – mostly because it was a genteel backwater – the power and the money now associated with this area of the business is now making me give it a try: Live and let die…..

The former market data world is getting very serious about enterprise data. For many practitioners, the front office is seen as ‘sorted’. We know we have a Bloomberg terminal or a Thomson Reuters one. If we need superfast access to execution venues and their market data, we can call upon a host of players whose services are separated by milli- and microseconds in terms of ‘quality’. You pays your money and you takes your choice.

But the enterprise data space is far from sorted. Traditional market data vendors like Thomson Reuters and Bloomberg are putting the pieces in place to compete – in different ways – across pricing and reference data, evaluated pricing, corporate actions, securities and entity identifiers and the enterprise data management (EDM) technology platforms used to consolidate these data sets and deliver them to client applications, like – in particular, these days – risk management.

Hence Bloomberg’s acquisition of PolarLake – a second-generation and arguably more nimble iteration of the EDM theme – and of Stanley Young, who has been running NYSE Euronext’s commercial technology arm for the past few years and, I reckon, will be the catalyst for Bloomberg’s transition from the (generally waning) terminal business to the (exploding) enterprise data business.

And hence Markit’s acquisition of Cadis Software – like PolarLake a second-generation EDM platform. Maybe Markit will use Cadis in a different way to how Bloomberg plans to use PolarLake, but for both the EDM offerings give them a short cut into the enterprise world, where the ability to deal with a broad swathe of data types, sources, frequencies and formats will be the next battleground (… Live and let die…).

Hold on, you say: Thomson Reuters just withdrew its Enterprise Platform for Data Management EDM platform. Surely, if there were gold in them particular hills, Thomson Reuters would be digging for it. With an offering in the space, it surely woulda and coulda duked it out against this relatively green competition?

I can’t speak for Thomson Reuters, but I note that the company never owned a true order management system (OMS) platform, when – five, eight years ago – the world looked as if it needed nothing more than an electronic way of connecting to execution venues everywhere. Then, Thomson Reuters took the agnostic route, and that’s what it seems to be doing now. It looks like it believes that it can best play the enterprise data game elsewhere – by offering broad and deep coverage and by adding value to its firmly established market symbology set, the RIC.

New money is pouring into ‘old school’ enterprise – read: reference – data suppliers. Interactive Data has owned tranches of the pricing and reference data marketplace for decades. An injection of capital – and people – from Warburg Pincus and Silverlake has funded a wholesale reengineering of the delivery infrastructure used to get its data out to and around clients’ organisations.

Likewise, SIX Financial Information – the enterprise data vendor formerly known as Telekurs – has invested in a new consolidation and delivery infrastructure based on technologies from OneMarketData and Asset Control. As with Interactive Data, SIX Financial Information (SIFI, anyone?) will use its new technology capabilities to offer its clients new business capabilities in terms of what they can do in the enterprise data space.

All the while, SunGard has been quietly joining the dots between its and its clients’ enterprise applications, particularly around risk management, using the former Fame enterprise data management platform, now part of its MarketMap data and data management offering. Using Fame, the company is able to handle clients’ internal data management needs – on a hosted basis, if required – providing market data where needed, and a ‘preferred integration’ status for the hundreds of implementations of its own applications.

Last – but not least, and in an incarnation that perhaps best fits A-Team’s worldview – Standard & Poor’s Capital IQ has just completed a triple whammy of acquisitions with the purchase of CMA, the valuations business of CME Group. According to our own Sarah Underwood’s analysis of the deal, S&P Capital IQ sees a direct line from CMA’s valuations data, through to the R2 risk management platform it acquired earlier this year – which will crunch CMA and other enterprise data to create a view of risk (enterprise or otherwise) – and on for distribution to clients and the marketplace using another recent acquisition: QuantHouse, the high-performance market data distribution facility.

Lou Eccleston, the former Bloomberg sales chief who now heads S&P Capital IQ, is leading the charge to turn Standard & Poor’s into a major player in the enterprise data space. Will Stanley Young do the same at Bloomberg? Can Gerry Buggy take Thomson Reuters’ Enterprise Content group into the stratosphere? Can the team at Markit integrate the firm’s broad data sets and former QuIC risk analytics using Dan Simpson’s Cadis platform? Can SIX Financial’s rebrand, reorg and reengineering power it to Central European and ultimately World Domination? Will Mason Slaine’s transformation of Interactive Data turn it into the powerhouse it always threatened to be? Or will it be Silverlake/Warburg Pincus stablemate SunGard’s approach – leveraging its substantial enterprise application client base – that proves unbeatable?

Only time will tell. But what these entities have in common is scale. The open book of enterprise data is coming to a close. To get traction, you need credibility, and to get sustained credibility you will need scale.

Enough to give it a try: ‘Live and let die’.

Editor’s Note: There is an exhibition at the Barbican in London celebrating 50 years of James Bond style. The exhibition runs until September 5.

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