Opening Cross: Things That Go Bump in the Night

As our deadline for this week’s issue falls on Halloween, it should be no surprise that there are some downright spooky things sending shivers up the spines of market data professionals.
First, Thomson Reuters is retiring its once-flagship-now-legacy 3000 Xtra display, to complete the move to its Eikon next-generation terminal. The vendor also recently killed off Bridge Data Network—the Freddy Krueger of data (aka the feed that wouldn’t die)—to cut the cost of supporting legacy data infrastructures. And with those legacy retirements, the vendor is also eliminating several thousand jobs in a move that will doubtless leave other staff checking under their beds for the boogeyman from the HR department.
Meanwhile, Mercury being in retrograde may have contributed to more technical glitches for exchanges last week, with Nasdaq halting some options trading after problems with dissemination of its index data feed, and the International Securities Exchange’s prices being excluded from the Options Price Reporting Authority’s national best bid and offer feed.
Exchange officials are always quick to point out that the amount of downtime from events like these each year is tiny compared to the vast majority of time when exchange systems purr smoothly along, and that few other industries can claim the same level of success.
However, other industries that fall short risk customers moving elsewhere—for example, if my cell phone provider keeps dropping calls, I can switch to another, or if the subway is always late, I can take a different line or get a bus instead (in theory)—whereas exchanges can generally feel secure that if someone wants to trade stocks listed in their domestic market, they have to trade on the exchange. Even in markets with multiple places of listing for the same stocks, firms generally feel obliged to participate in all or most exchanges to ensure best execution or arbitrage between exchanges. And many of those firms feel that exchanges exploit this situation to increase prices without fear of firms walking away in protest, with many also saying that exchanges have been hiking data fees to make up for lower transaction revenues—especially in the lower-volume periods during and after the financial crisis.
Nasdaq OMX’s third-quarter financial results bear out this trend, with information services revenue overall rising almost 19 percent over last year to $118 million, and within that figure, market data rising by $16 million to $100 million in total for the quarter, as a result of audit collections and revenues from Nasdaq’s eSpeed acquisition, among other initiatives, while equities and derivatives trading revenues slipped by $1 million each.
But elsewhere, it was a different story: At the Chicago Board Options Exchange, Q3 transaction fees rose by more than $6 million to almost $93 million, while data revenues were mixed, with Q3 revenue rising but revenue for the nine months ended Sept. 30 dropping. And at Spanish exchange group BME, equities trading volumes and revenues rose, while market data revenues fell by more than 5 percent over Q3 2012.
It’s unlikely that we’ll see market data fees decline, even if trading volumes and revenues fully recover—in fact, with more trading, venues typically argue that their data commands greater value—but exchanges may feel less pressure to raise them quite as much if trading delivers sufficient revenues. But if not, remember remember what follows Halloween—the fifth of November, when we commemorate Guy Fawkes’ attempt to blow up the UK parliament: if the mood among the populace is right, an upstart can shake up the establishment. So if venues try to abuse their power, there’s no shortage of others eager to fill the gap, such as the new Asia-Pacific Stock Exchange, or BATS Global Markets, with its new low-cost data terminals, developed with Interactive Data. And a market with healthy competition is what will keep the big boys checking under their beds for things that go bump in the night.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Emerging Technologies
Waters Wavelength Ep. 315: Company names and the loans market
This week, Reb, Nyela, and Shen talk about unimaginative company names and then address some challenges in the loans market.
Deutsche Bank delivers AI, client insights with ‘muscle memory’
Voice of the CTO: The German bank is taking finely honed skills and capabilities and deploying them for new and emerging use cases.
Study: RAG-based LLMs less safe than non-RAG
Researchers at Bloomberg have found that retrieval-augmented generation is not as safe as once thought. As a result, they put forward a new taxonomy to help firms mitigate AI risk.
M&A activity, syndicated loans, a new tariff tool, and more
The Waters Cooler: LSEG and LeveL Markets partner for new order type, QuantHouse gets sold to Baha Tech, and Fitch Ratings has a new interactive tool in this week’s news roundup.
Nasdaq, AWS offer cloud exchange in a box for regional venues
The companies will leverage the experience gained from their relationship to provide an expanded range of services, including cloud and AI capabilities, to other market operators.
OCC’s security chief on generative AI with guardrails
Clearinghouse looks to scale technology across risk and data operations—but safety is still the watchword.
Bank of America reduces, reuses, and recycles tech for markets division
Voice of the CTO: When it comes to the old build, buy, or borrow debate, Ashok Krishnan and his team are increasingly leaning into repurposing tech that is tried and true.
Waters Wavelength Ep. 313: FIS Global’s Jon Hodges
This week, Jon Hodges, head of trading and asset services for Apac at FIS Global, joins the podcast to talk about how firms in Asia-Pacific approach AI and data.