Waters Wrap: On Refinitiv and Old Rivalries (And FIGI & Data Governance)
Anthony explores some of the questions raised by Refinitiv's plan to move away from Eikon and Thomson One. He also looks at data governance trends, and asks why the FIGI is having such a tough time gaining acceptance.
Before we get into it this week, be sure to check out Jo Wright’s column on a new proposal from the European Union, which, among other things, would make cloud service providers like Amazon Web Services, Microsoft Azure, Google Cloud Platform, and IBM Cloud answer to one of the three European regulatory bodies. Jo has become an authority on Big Tech regulation in Europe, and this section of this particular proposal isn’t getting much attention right now—but if it goes forward, it definitely will.
Also, congratulations to Mike Meriton on being added to the Inside Market Data Hall of Fame. For those uninitiated, he is the former CEO of reference data platform GoldenSource, and he co-founded the EDM Council in 2005. Simply put, in the world of enterprise data management, Meriton has been an important driving force, and his inclusion in the IMD HoF is well deserved.
Refinitiv’s Next Battleground
I started writing for WatersTechnology 11 years ago this month. Back then, you could argue that the most interesting topics in capital markets tech and data were trading terminals and market data revenues. But a good story needs to have conflict, and as Hans Rosling writes in the book Factfulness, “Journalists who reported flights that didn’t crash or crops that didn’t fail would quickly lose their jobs.” So it was that the most fun financial technology stories to write back then involved the jockeying for terminal supremacy between Bloomberg and Thomson Reuters.
It was a decade ago that our market data guru Max Bowie wrote this for a year-in-review story:
But it was other facelifts by Thomson Reuters and rival Bloomberg that garnered the most attention. Thomson Reuters launched a new integrated data network dubbed Elektron that incorporates the vendor’s RMDS data platform and global hosting centers to deliver a 20-fold latency improvement for proximity hosting clients, officials say, and later unveiled its long-awaited new Eikon desktop platform—previously codenamed Project Utah—that will ultimately replace the vendor’s 3000 Xtra and Thomson One terminals. Meanwhile, Bloomberg rolled out its latest Launchpad Windows-style interface, with new capabilities to allow users to more easily access, visualize and share data—though the industry was still marveling at Bloomberg’s new marketing campaigns, subway ads, and move to an “open” architecture—and also expanded the range of content available via its BVal evaluated pricing service.
Here we are in 2020, and hindsight tells us that the rivalry today is different, even if the strategies behind those earlier moves led to where Bloomberg and Thomson—now Refinitiv—are today.
Max spoke this week with Mitko Yankov, global head of platform at Refinitiv, about the company’s new “Workspace” platform, which will eventually replace the Eikon terminal and Thomson One range of workstations.
Workspace is Refinitiv’s next-generation data platform, which aims to deliver distinct content and capabilities tailored to the needs of different types of users via a front-end display and APIs that connect the front and back ends. As Max writes, “while Workspace’s GUI is its most visible representation, its strength is its API-driven back end that enables clients to make use of its data in other applications, depending on a firm’s needs and model.” (If you want the full skinny on Workspace, click on that link—this article is more about speculation.)
The release of Workspace seems to further bury those old “terminal supremacy” stories. It doesn’t feel to me that this platform is taking aim at the ubiquitous Bloomberg Terminal or Bloomberg’s datafeeds. Rather, this sounds like a new type of workflow and collaboration platform. (And, yes, Bloomberg also has workflow and collaboration tools, but it’s also clearly a different kind of environment than what we’re talking about with Workspace.)
So, as I and Hans wrote previously, conflict and competition is far more fun to write and read about—so let’s speculate recklessly about Refinitiv’s grander plans with this release.
Obviously, Refinitiv and Bloomberg are still competitors, and so they are, too, with data giants FactSet, IHS Markit, and others. But Workspace is about adapting to the trading world of the future. As we wrote at the time news broke of the London Stock Exchange Group’s acquisition of Refinitiv last summer, this deal was always about more than just market data—there’s a significant tech infrastructure to consider when it comes to Refinitiv.
Listen, I know that I’m a bit obsessed about desktop app interoperability, but it’s the idea of openness through cloud and APIs that are pushing the workflow/collaboration space forward. Workspace taps into that evolution as the open API platform brings the front and back offices together (in theory).
It’s here where it feels like Refinitiv is almost competing against Symphony, at a time when Symphony is expanding its own platform to include an identity management service, which is also a service provided by Refinitiv. In this way, Workspace is a workflow/collab solution built by an established data vendor, rather than a workflow/collab platform with young start-up roots that brings in partners from all over the place.
This move also seems to align a bit with moves made by two other major trading platforms: BlackRock’s Aladdin and State Street’s Alpha trade management systems. BlackRock’s COO and head of solutions Robert Goldstein recently said that the asset manager is seeing increased demand for interoperability with asset servicers, trading venues, and market data providers.
“We are seeing that demand continue to grow on this ever-aspiring quest for true straight-through processing, consolidating the number of systems that people use to do their jobs to manage their processes, and, importantly, to maintain optionality in their counterparty relationships,” he said.
He pointed to Aladdin Studio, a suite of tools focused on integration and collaboration, as evidence for how BlackRock is answering this demand. “These Aladdin APIs, as they’re used by developers at BlackRock [and] our clients within the Aladdin community, are providing building blocks to create custom applications and integration tools for solving what may be their own idiosyncratic workflows,” he said.
For State Street, following its acquisition of Charles River Development in 2018, the Boston bank is looking to improve its own trading platform by incorporating tools from the Charles River Investment Management System (IMS). As Spiros Giannaros, the CEO of Charles River, told WatersTechnology this summer, while data is the cornerstone of the platform today, State Street and Charles River are making sure to inject system, or server-side, interoperability into Alpha to better position it in the future.
“We really want to be open. There’s this theme of choice,” Giannaros said. “If you found the best-in-breed provider in the risk analytics area, or you just have a separate provider in custody, we’re interoperable in that you can take components of this solution without necessarily being bound to all of it.”
So it would seem that the huge, legacy trading platforms of the past are having to open up to incorporate front-to-back solutions—some will do that by connecting different apps together from across the industry using APIs and industry-specific operating systems from the likes of OpenFin, Cosaic, or Glue42, while others will look to create welcoming ecosystems but where they still have the majority of control over the end-user’s needs. It would seem to me that Refinitiv is trying to fit into this latter space, whereas, previously I would’ve said that they were looking to be part of the former’s movement.
Then there’s the exchange angle of Refinitiv’s Workspace platform. Think first about what the Intercontinental Exchange (ICE) and the Chicago Mercantile Exchange (CME) have done on their data fronts. They’ve essentially brought together exchange data for equities and derivatives, and, through acquisitions, blended traditional data with over-the-counter (OTC) content. They then combine that with enhanced communications tools to create something that is more front-to-back for traders. Refinitiv allows LSEG to follow suit, but the exchange isn’t going to care as much about the trading platform portion of the Refinitiv offering—just to keep on hammering it home, it’s about workflows and collaboration.
Finally, beyond the question of whom Refinitiv is competing against with Workspace, there are two other interesting questions that will need to be answered in the future.
First, what’s to become of Refinitiv’s TREP market data platform, which, through iterations, has been central to financial firms’ data architectures for more than 20 years? As Max expertly detailed earlier this year, data professionals are worried that there isn’t a roadmap for TREP (and for the Elektron infrastructure network that they built around it) to future-proof what Max calls “the heart, lungs, and entire nervous system of any trading operation.” Is there a need for something like a TREP in this future state, or will Workspace eventually open things up for others to come in and take over for TREP (and thus taking that responsibility off the shoulders of LSEG)?
Second, does Refinitiv need to completely restructure its commercial agreements? If you create this open environment to make a true collaboration platform to share information—where you can seamlessly push information both to internal colleagues and to customers—how do you make sure that those who see something are the same as those who are allowed to see it? Imagine going through all that investment and re-branding for this outcome:
“Hey, we built all this great sharing functionality for you!”
“Great! What can I now share?”
“Nothing! The people you want to share information with are not permissioned to see it, so you’ll have to pay significantly more per month to do so!”
Essentially, Refinitiv is overhauling its technology, but won’t they also have to overhaul commercial agreements to let users take full advantage of the features they’re building? (We’ll look to answer the question better in the future once traders actually start using Workspace.)
To wrap it all up, here are my opinions, but I’d love to hear from you if you think I’m off base. Actually, I’d REALLY love to hear from you if you think I’m a genius and have nailed it perfectly…anyway: The Thomson/Refinitiv versus Bloomberg competition isn’t what it once was; that’s because the nature of trading tools is changing due to cloud/APIs/interoperability; workflow and collaboration tools are the future battlegrounds, not just for the vendors like Refinitiv and Symphony, but also for exchanges like ICE, CME, and LSEG; and, finally, as platforms become more open, there are serious questions around data licensing, compliance, and auditing that will have to be answered.
As always, tell me if you think I’m a moron, a genius, or a lousy hack: firstname.lastname@example.org. On my best days, I’m all three.
Take My Data, Please!
You know which stories I hate writing? Data governance stories.
I swear to God, once I start hearing about how important it is to get senior-level buy-in, how important training programs are, and how everyone from business pros to technologists need to understand the importance of data, my eyes roll into the back of my head so hard that I begin to worry that they’ll get stuck but there permanently. Sure, these things are important, but I find it’s similar to conversations about diversity—execs can spew platitudes and positivity, but when you actually read the receipts, they’re simply talking a big game and not practicing what they preach.
With that said, I did find this article by Josephine Gallagher interesting. During a panel on data governance at the WatersTechnology Innovation Exchange, Kate Taylor, executive director of data governance at Morgan Stanley, said that when the question of data ownership comes up, the business needs to both take the responsibility and the blame if things go wrong.
Morgan Stanley has spent the last year deploying a federated governance structure for managing data across its organization. The approach means that each business within the firm has both ownership and accountability for all the data it uses, taking the onus off the bank’s information technology teams.
“I think there is a recognition that the business needs to take ownership and be held accountable,” she said. “Historically, the technology [and IT teams] have been responsible for data and I think people are starting to understand why the business needs to play a role. … In my organization, we [the data governance team] don’t actually own or manage the data directly. We provide the capabilities, the tools, the visibility to where the organization stands, and the ownership of the data and the actual day-to-day management of it is done out in the business areas.”
In this structure, the data governance team gives the business the tools they need to manage the data, but it’s not their job to oversee the data.
This mirrors another trend: business professionals—portfolio managers, traders, risk managers, sales people—need to be more technologically proficient. This doesn’t mean that a research analyst needs to know how to build a complicated predictive model, but knowing how to interpret, verify, and understand data using Python is a plus.
Similarly, business pros know the data they need better than a technologist or data specialist. The latter supply the tools and workflows to make handling the data easier, but the data isn’t theirs to manipulate and make the company money—that falls to the business.
And the good thing here is that if those on the business side can talk tech and data more articulately, the conversations they have with software engineers and project managers will be more fruitful.
FIGIs & Fiefdoms
And finally, if you are a data professional, you should definitely read Reb Natale’s feature looking at the state of Bloomberg’s Financial Instrument Global Identifier, a.k.a., the FIGI.
She wrote 2,500 words on the subject—and this column is about the same length, so here are the CliffsNotes: The FIGI struck out twice last year with the ISO. One technical committee voted down the idea of making the FIGI an ISIN-like standard, and a second scheduled vote in front of a separate working group never materialized. Since then, the FIGI has been adopted as the national standard in Brazil, and Bloomberg hopes to get it adopted in other FIGI-friendly countries. The SEC has also asked for comments related to the FIGI from market participants directly through two new rule proposals that would make changes to two forms routinely filed by investment managers.
Here’s the thing that I don’t fully grasp, though, when it comes to FIGI’s adoption: it’s free to use, as opposed to a CUSIP, which can tick well over six figures in licensing fees—so why aren’t more banks pushing for the FIGI to become accredited in the US? Beyond the cost-cutting, it seems as if it would make reporting non-equity instruments, such as options and loans, easier; currently such securities must be identified using the CUSIP number of the underlying equity.
As Reb writes, there’s an “if it ain’t broke, don’t fix it” mentality, as other already-existing standards—such as CUSIP, ISIN, and SEDOL—are often heavily entrenched within firms’ infrastructures due to legacy technology practices and prior lock-in to a specific identifier forced by a data provider. Why go through the back-breaking work or switching an identifier if no one is howling mad?
Also—and sit down, because this might come as a shock—Bloomberg is a data company, and there are legitimate concerns over making Bloomberg almost a reference data industry utility.
But still, free is better than $400,000, and when have banks been so willing to leave money on the table? I feel like I’m missing something here. Care to enlighten me? Hit me up: email@example.com.
And finally, here’s my last take away from that story (which is outstanding): As I’ve written previously, there are too many fucking acronyms in the world of reference date. GTFOH.
Image: “Stag at Sharkey’s” by George Bellows, courtesy of the Cleveland Museum of Art’s Open Access program.
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