Dear Doctor: Well, it’s 2012 and after a few years of letting myself go to seed, it’s time to revitalize body and mind, and get back in shape and start being more positive. So I have to set some strict New Year’s resolutions: Get fit, eat better, and find love. Yours sincerely, the market data industry.
Get fit: First, I need to lose some more weight. This year looks set to be another tough one economically, so I need to get rid of every last ounce of fat, meaning that more layoffs are likely in the capital markets, which will no doubt trickle down to the market data departments of banks and the buy side alike, and lead to those responsible for trimming data spend finding themselves being trimmed.
But it’s about working out as well as slimming down: In fact, this means that those in a position to take advantage of opportunities—particularly fast-growing buy-side firms and hedge funds—will be able to bulk up like an extra on Jersey Shore, adding muscle to their own data operations to support growth. Meanwhile, vendors are also likely to take advantage of the pool of available talent, and use that to beef up their own presence to support the increasing demands of clients who find themselves needing extra nutrition after putting their data departments on a starvation diet—such as data cost and contract management software vendor MDSL, which has just hired data veteran Steve Ellenberg as Americas lead for its MDX professional services arm. Think of these guys as a personal trainer, taking that lean body and turning it into something that can pump serious iron in 2012.
Next, eat better. Avoid grease. Sorry, Greece. And Italy. And Europe in general, really. Instead, the industry needs to reduce its exposure to starchy Western economies and seek out a diet of rich and nutritious emerging markets, as well as pursuing a “Paleo diet” of sorts—basic grains, meats, and commodities in general. Sure, volatility in other markets will continue to attract interest from risk-takers. But MF Global’s sudden coronary last year was a shock to the system: the markets are a long way from being safe waters to go swimming, and do you want to swim with the sharks or play volleyball on the safety of shore (note to self: swimming is very good exercise, and Shark meat is nutritious and tasty)? So expect to see data executives expanding their repertoire of beach sports as firms look for new areas to compete, and demand associated datasets.
Once I’m in shape, the next step is to find true love, and seek out mergers with potential partners. The industry is already well down this road—the US Department of Justice recently gave its blessing to Deutsche Börse’s proposed nuptials with NYSE Euronext, though European competition authorities may yet leave the German exchange group waiting at the altar. But expect more love this year: a still-tight economy with the promise of growth around the corner could create the perfect circumstances for more matchmaking, as entrepreneurs look to capitalize on their investments and hard work, and potential buyers start eyeing up trophy mates that will boost their household income. But love won’t just fall into the industry’s lap: We all have to think positive, and make our own opportunities to achieve growth and our other goals in 2012.
And finally, no more turkeys: With the industry slowly moving towards acceptance of on-demand data and apps—and with abstraction technologies making it potentially easier to displace incumbent services and chop-and-change between vendors—we’ll see the data industry experience the same culture shock that the music industry did with the invention of downloadable MP3 audio files of individual songs: If an artist wants someone to buy their album rather than only the single, every track has to be a hit. And likewise, if incumbent vendors want to remain, well, incumbent, every new product can’t afford to miss the spot.