There are opposing forces at work in the world of market data, pulling demand in different directions. And though each force has an equal and opposite opposing force - its nemesis, if you will - they are sometimes two sides of the same coin.
On one hand, the focus on low latency continues (see this issue's stories about Schneider Trading using Corvil, or the New York Stock Exchange's SIAC subsidiary reducing the latency of the Consolidated Tape Association's datafeeds), while there is also demand for more granular benchmarks and investment vehicles, and workflow applications that cater to "high-latency" individuals in investment banking or wealth management roles (such as CRSP's upcoming index series that utilizes a new methodology, or Dow Jones' Adviser application for investment advisors and wealth managers, which SunGard is integrating with its WealthStation product).
However, these trends don't appear to be mutually exclusive: If anything, it seems that as one business area moves further down the low-latency path, other parts of the business are able to more clearly identify themselves with niche services that suit their needs. Or perhaps this has always been the case, but the difference now is simply starker than before.
That said, there is also more crossover between the two, as low-latency data is being used to generate more detailed analytics as inputs to trading decisions, while specialist applications are focusing on streamlining users' workflow and making client interaction both more efficient and better informed.
But to be better informed - whether in the low-latency or high-touch space - you need the best tools. And to deliver these, firms and vendors are setting another trend, which is the antithesis of opposing forces, by partnering with others to get what they need where there's an opportunity for mutual benefit - such as CFN Services and Essex Radez, CRSP using Interactive Data and Nasdaq to calculate and disseminate its indexes, or SunGard integrating Dow Jones content.
Perhaps this is a recognition that in a tough economy, it makes more sense to leverage others than to try to build everything yourself - for example, in CFN's case, using data from Essex Radez as the basis for its new data and connectivity platform saved the vendor 18 months of setting up its own connectivity, while the deal between Dow Jones and SunGard gives SunGard's wealth management and advisor clients access to specialist content while giving Dow Jones access to that user base in return.
If the economy were better, would these companies eschew such arrangements in favor of creating and marketing their own services? Because the one problem with a best-of-breed approach is that if everyone sources the same "best" content and tools, you can end up with substantially similar services - making it easier for vendors with the most scale to compete on price - rather than varied sets of content and tools that differentiate providers.
What's wrong with that if it drives down costs for end-users? Well, nothing in theory - except that smaller companies doing really smart stuff can't always compete on price with the larger vendors.
One such provider of "smart stuff," Titan Trading Analytics - which generates trading indicators based on historical data and sentiment analysis - is straddling this issue, pricing itself lower than it would cost for a firm to assemble a comparable infrastructure on its own, according to CEO John Coulter, while also planning to use brokers and vendors as partners to reach a broader client base.
Balancing these different factors is a fine line between success and failure for any initiative. But it's one that any Dark Knight must walk to differentiate themselves as a hero in the Gotham City of market data.
Bryan Harkins joins to discuss how the CBOE-Bats integration is going and plans for the exchange operator going forward. Anthony and James talk about the SEC hack and Esma's potential new powers.Subscribe to Weekly Wrap emails