In Upton Sinclair’s The Jungle, the author chronicles some of the finer points of sausage making in the early 20th Century, leaving us with the inescapable conclusion that there was nothing fine about what went into 20th Century sausages. Today, sausage packets contain mandated (and usually long) lists of ingredients and nutritional information. But has that transparency made us feel safer? What’s BHT? And should I be worried that it’s an ingredient in jet fuel as well as a food preservative? Whatever happened to simplicity?
You may well ask the same thing about the financial markets in which we operate. When did everything become so complex? And when did my data become so sophisticated that it’s damaging to my (budgetary) health? Because increased sophistication comes with a price tag. For example, the humble steering wheel, which in Formula One racing has evolved from a circle of leather-coated metal designed only to turn the car’s wheels into a space-age control panel where steering is merely one of its functions, controlling everything from gear shifts to fuel flow to brake bias. The cost of this extra sophistication is estimated at a cool $50,000.
Of course, sophistication and simplification go hand in hand. While the F1 steering wheel becomes very sophisticated, it also simplifies the driving experience by placing all the controls in one obvious place. A similar argument would be how in the index world, index providers are developing countless numbers of new index benchmarks. From a sophistication perspective, this produces a mire of indexes to wade through. However, from a simplicity perspective, there’s a better chance that you’ll find something that suits your particular investment style. This is a balancing act that all providers must perform, including the Bucharest Stock Exchange, which is currently in the process of expanding its index business.
Meanwhile, the International Securities Exchange is offsetting any increase in complexity resulting from a new set of datafeeds for its upcoming Mercury options market by making sure those feeds conform to the same types and formats that its subscribers are familiar with from its main markets, thus simplifying the process of connecting to the new market.
Dutch data software vendor Screen InfoMatch is also simplifying connectivity, by adapting its InfoMatch inventory management platform to suit the needs of different groups of users. For example, whereas the product has always had good traction among large banks and asset managers, the vendor sees parallel uses at exchanges, energy companies, and even private equity firms, all of whom have data management requirements, but which may not have been as conscious as seasoned bank execs that their usage and spend had become so complex.
And UK-based Web Services Integration is using HTML5 to boost cross-platform support for its Xceptor vendor management platform—the benefit of which is that users would have access to all of Xceptor’s functionality from other devices, such as Apple iPads.
So in reality, there are dual forces at work, and that every step towards greater sophistication and complexity is balanced by a step towards making more sophisticated results easier to work with and understand. After all, as the Screen InfoMatch example shows, simply pursuing ever-increasing sophistication for a specific audience results in being bound to the whims of that audience, whereas making something simple enough that anyone can use it opens it up to new, broader audiences.
In this age of mandated transparency, it seems that the very need to mandate transparency tells us that we should be making things simpler. At the end of the day, remember that we’re all making sausages, and no one will thank us for making the best sausage in the world if the ingredient list is filled with unknown compounds or if the cooking instructions are overly complicated.
Victor Anderson, who is in town from London, joins Anthony and James to dig into the key themes from Waters USA.Subscribe to Weekly Wrap emails
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