Source: Inside Market Data | 19 Nov 2012
Anyone in the data business can tell you that content is king, but is also easily commoditized. After all, the exchange price is the exchange price, regardless of who supplies it. Hence, high-value datasets typically involve a proprietary model for pricing instruments, assigning a value to risk, or that perform some kind of research to derive a signal that—either as standalone content or as a complement to other data—will take a company and its clients to the next level.
So it’s hardly surprising that we’re seeing a steady growth of interest in niche research and analysis tools, ranging from CapitalVue’s China-focused reports to the increasing number of independent research providers joining agency broker Instinet’s research platform (such as healthcare research provider Truth On Call last week), and to new types of analysis, like Lucena Research’s QuantDesk decision support tools, which will launch next month, and social media content such as that aggregated by DataSift, which just announced a $15 million funding round, or sentiment data from RavenPack, which has rolled out a macro sentiment index.
However, niche tools and content are often provided by equally niche specialists that provide datasets or analytics that are simply uneconomical for the big vendors to pursue. So how do big vendors keep those clients happy while not being distracted by small projects? One solution is to build an “app store” model—such as those being pursued by Thomson Reuters and Bloomberg, which launched its App Portal last week—that allows users of a vendor’s core service to access integrated applications and content from third-party vendors within its framework. The big vendor keeps its clients happy, gets potentially more users for its data, and the smaller vendors gain a wider audience for their services than they could reach on their own. In a similar way, Activ Financial’s plans to expand relationships with partners that consume its data also allows the vendor to expose more services to its own clients.
And while some of the content may sound old-school, there’s nothing old-school about the way firms are using it—no longer hiring floors of analysts to pore over figures, but rather employing Big Data engines to store, combine and analyze vast quantities of information in myriad ways to identify correlations or add context and value. In fact, there’s so much interest in Big Data that benchmarking body the Securities Technology Analysis Center is setting up a special interest group to address its challenges.
In recent years, STAC and others have spent a lot of time creating benchmarks for low-latency systems and complex components of data and trading architectures. But whereas latency is no longer the differentiator it once was, technology overall is still a competitive advantage—it’s no longer just about being the fastest, but whether you are leveraging technology in a way that makes it easy for clients to access your content, and makes it cost-effective enough so that your company can position itself as being able to take costs out of clients’ organizations, while also giving you the scope and flexibility to commercialize and exploit your content and infrastructure in ways you may not have envisaged—which is what Activ Financial believes new hire Will Kennedy can help the vendor achieve in its bid to win more enterprise-level business.
Which brings me to my final ingredient: people. Because behind every company is a founder; behind every successful one is a great leader; behind every new content set is a visionary mind; and behind every new technology is an engineer with the skills to write the code. The right people can elevate a second-rate company, while the wrong people can sink a top-notch one. And when you combine the right people with the right company and content or technology, you get what former Wombat execs Danny Moore and Ken Barnes are hoping to achieve by joining infrastructure-as-a-service provider Options IT: a winning combination that can reap the benefits of taking a growing company to the next level.
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