Battles Over Data's Value

michael-shashoua-waters

Debate about privacy and value of retail consumer data illustrates similar issues with financial industry data. Financial services firms and proponents of open standards are seeking ways to break others' grips on valuable data

"What Stays In Vegas: The World of Personal Data – Lifeblood Of Big Business – And The End of Privacy As We Know It" by Adam Tanner, published September 2, describes the ways the personal data industry has begun to capitalize on the value of data that the financial services industry has known and leveraged for much longer.

Brokers of personal data—companies such as Acxiom and Experian are among the larger ones—do have inaccuracies or out of date information in their data, as Tanner reports. These brokers, along with Facebook and many companies outside the e-commerce realm, continually try to get consumers to volunteer information about themselves.

It isn't possible to really attempt the same consensual harvesting of data in the financial industry. Participants are well aware of the value of their data. Still, some organizations do try to at least champion open standards, such as the EDM Council's promotion of the Financial Industry Business Ontology (FIBO), intended to coordinate taxonomies for fixed-income reference data.

Retail consumers, as Tanner points out, are confronted with terms-of-service agreements filled with legalese, which allows the companies who draft that boilerplate to change their own rules for selling data they collect, at any time, in any way.

Although some consumers have chosen not to patronize certain companies over this data privacy issue, participants in securities exchanges have at times tried to fight for control of the data they generate—at least not to be charged to access it. Last year, Sifma, the US securities industry trade association, appealed to the US Securities and Exchange Commission, claiming fees for proprietary market data charged by several US-based exchanges are illegal.

But financial services firms cannot opt out of generating data for the exchanges. That's inherent with their trading activity. They also cannot practically opt out of obtaining market and reference data if they still want to trade and manage assets in an informed fashion.

The exchanges may be way ahead of where brokers of personal data are, in terms of deriving and locking up value from data, but they also face the prospect that those who generate and provide the data could chip away at their hold on valuable information.

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