Opening Cross: Communicate Clearly and Be on Your Best ‘Behavior’

This week, I got a small taste of what it’s like to be a market data manager calculating the cost of new exchange fees, as I tried to decipher the impact of new fees that Direct Edge plans to introduce this May, and to understand who qualifies as a recipient, an internal distributor, and an external distributor under the exchange’s definitions.

Fortunately, no big investment bank will ever entrust me with its data budget, and the guys at Direct Edge were not only helpful in clarifying how the new fees will work, but were also prompt about it—not that I’d expect anything less from an exchange run by former head of Nasdaq market data Bill O’Brien, who also occupies the cover of March’s Waters magazine.

This type of timely, informative communication between suppliers and customers is not only key to effective market data management, according to a panel at last week’s FISD Issue Brief in New York, but is becoming increasingly important in light of the amount of information that data professionals must process and respond to on a daily basis.

On the FISD panel, exchange, vendor and end-user executives debated the best and worst ways of providing information about information provision, and it became clear that there’s a need for some form of standardization of exchange and vendor communications. Perhaps this will be addressed by exchanges or industry groups such as FISD, or perhaps this will be a logical next step for those who operate and maintain databases of exchange policies, such as Ballintrae, Spearhead and Partners, or even the Niagara consortium database set up by French user group Cossiom.

But to sum up the discussion, too much communication is as worthless as none at all, and all parties must keep their communications simple.

Of course, achieving simplicity in an industry with datasets as complex as the financial markets is an often-strived-for but rarely-achieved goal. But that’s what Bloomberg is aiming for with a new set of features dubbed Bloomberg Next, which consolidate previously disparate datasets into a series of overviews by asset class and function, enabling users to get a broad view of a particular topic that they would previously have needed to compile from separate pages.

So what’s next (no pun intended)? Perhaps terminals that “learn” from their users’ past activity to display information that they “think” will be of interest to a trader looking at a particular piece of data—much as search engines filter results based on location and browsing history, or how Pandora Radio or Tivo present songs or shows based on others that you’ve given a “thumbs up” or “thumbs down” in the past.

After all, behavioral analytics are already used in other areas as additional inputs to trading decisions, such as Insider Insights and Recorded Future, whose analysis of the impact of insider deals and information on market sentiment related to particular events, respectively, have been incorporated by Titan Trading Analytics into its stream of behavioral indicators. In addition to these, Titan is already working with behavioral finance research and analysis provider MarketPsych, which is adapting its systems to process events and sentiments from Chinese media, given China’s influence on other global markets—particularly commodities. And if Market News International’s latest China Business Sentiment Survey—which shows improving sentiment for Chinese companies—is anything to go by, Asia will continue to be a key indicator that firms must take into account, with new analytics and sentiment tools covering the region likely to become more popular.

And of course, it’s when dealing with exchanges and content sources in these emerging market economies that communication is most important. Hence, I’m always glad that I just have to wax lyrical about these issues, and can leave the “doing” to the real professionals.