Bloomberg Blames Router Hardware for Asia Terminal Interruption

INFORMATIONASIA-PACIFICSPECIAL CONFERENCE FINANCIAL REPORT Inside Market Data November 16, 2015 waterstechnology.com/imd Volume 31, Number 3 Users Seek Justification for LSE Fee Hikes NEWSWIRES 5 Finwire Unveils Swedish The London Stock Exchange Group (LSEG) is share of trading in FTSE 100 stocks currently Mutual Funds News Service introducing an average 4.8 percent fee increase below 60 percent, data subscribers say the price for its UK and International Level 1 and Level of the data no longer reflects its value. DELIVERY TECHNOLOGIES 2 market data products, which officials say In a notification sent to end users on Sept. 6 Lucera, Perseus Launch reflects continued enhancement of its “content 29, Caroline O’Shaughnessy, global head of Global On-Demand SDN delivery and scope,” but data consumers say the sales and marketing for LSEG’s Information Financial Network exchange is simply raising fees to combat falling Services division, informed customers of the data revenues. new pricing model, which will take effect on SPECIAL REPORT Combined with two earlier fee hikes for the Jan. 1, 2016. 7 Asia-Pacific Financial same products in July 2013 and January 2014, Monthly non-member fees for UK Level Information Conference the new fees represent a cumulative increase 1 data will rise by 4.75 percent from £40 to of between five and 15 percent over two-and- £41.90 per device for professional users, while SPECIAL REPORT a-half years. However, with the LSE’s market UK Level 2 data will rise by 4.9 per- >3 10 Buy Side Still Taking Wait-and-See Approach to Symphony Markit Unveils Total Return Swap Data Service

ORGANIZATION & STRATEGY Information and services provider Markit is In 2012, Markit launched a set of standard- 11 RSRCHX Preps for Hiring rolling out a new total return swap (TRS) data ized TRSs based on a series of its iBoxx bond Spree, Content Push service to provide quote data and daily trading market indices. The iBoxx TRS enables users volumes to market makers, hedge funds, asset to trade swaps and receive quotes across mul- ORGANIZATION & STRATEGY managers and institutional fixed income inves- tiple market makers electronically. These trades 12 Markit, Deutsche Börse tors, in a bid to bring greater transparency to became electronically confirmable at the end of Invest in Illuminate the TRS market. March 2015 via the vendor’s MarkitSERV trade The service combines end-of-day TRS con- confirmation service. sensus prices as well as daily trading volumes— “Previously, we were more bespoke, but in COLUMNS which are currently between $200 million 2012, we began to work with market partici- and $300 million notional—to help market pants on the buy- and sell-side to develop a set 4 KILBURN’S CORNER participants understand flows and to provide of standardized swaps. As liquidity in the fixed While MiFID 2 Sleeps, independent data for valuation and risk control. income markets has decreased, which >3 London Burns

5 HERD Bloomberg Blames Router Hardware 6 SCROLLING NEWS for Asia Terminal Interruption Clients of Bloomberg’s Professional terminal in pants as a result. the Asia-Pacific region experienced issues with In a notice sent to clients, Bloomberg offi- data display on the morning of Monday, Nov. cials say some users in the region experienced 9, as a result of a hardware failure on a router terminals disconnecting or running slowly. The in one of the vendor’s US datacenters, Inside vendor traced the problem to a router in one Market Data has learned. of its US datacenters, and disabled the router, Sources say the impact on user firms was sending data traffic through a backup router. limited because the incident occurred early in Terminal service then returned to normal, offi- the morning local time in Japan, before market cials say, though some users continued to expe- open in other regional markets, and because all rience slowness “for a short period of time.” users were equally affected, so no one was able After investigating the incident, Bloomb- to gain an advantage over other market partici- erg found that the “control board”— >12 Complete access for your entire organisation to WatersTechnology

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Digital Publisher of the year 2010 & 2013 waterstechnology.com/solutions EXCHANGE WATCH CONTENT FOCUS Users Seek Justification for LSE Fees Markit

<1 cent from £157.50 to £165.05. Simon Youdan, head of business devel- <1 has been documented by a whole Member fees for Level 1 and 2 will also opment for LSE real time data declines host of sources, iBoxx TRS has become increase by around five percent. to comment on the disparity between a well-accepted mechanism to trade Meanwhile, monthly non-member the LSE and other exchange’s Level fixed income exposure, total returns as fees for International Level 1 and Level 2 fees, but says that the LSEG offers indices, rates and credit.…That’s the 2 market data will increase by 4.77 per- customers of a range of data options background to this new service,” says cent and 4.82 percent respectively, from for over 26,000 tradeable instruments Marc Barrachin, managing director of £22 to £23.05 and £82 to £85.95 per with prices that are fully transparent on Markit indices. device. International Level 1 and Level its public website. “We have provided Following the development of the 2 data for members will also increase by our customers with notification of the iBoxx TRSs, Markit has decided to five percent. changes ahead of their introduction in launch a new standardized end-of-day Back in July 2013, the LSEG increased January 2016 in line with industry-wide data service to help further the market’s member and non-member professional best practise timelines. There is no fee maturity. The vendor is sourcing end-of- fees by more than 5 percent for UK increase on non-display or redistribution day prices, buy and sell quotes and yields Level 1 data, 7.5 percent for Interna- licences, and the changes reflect contin- from its Markit parsing tool, which sits tional Level 1 data, and between 2 and ued investment and enhancement of our on the desks of 250 buy-side custom- 3 percent for International Level 2 data. content delivery and scope, including ers and digests unstructured messages Then six months later, in January 2014, our Group Ticker Plant project, which from market makers—including emails, the exchange introduced a further 2.5 will considerably improve customer per- instant messages and Microsoft Excel— percent increase for non-members for formance,” Youdan adds. and electronically turns them into a its Level 1 and Level 2 UK and Interna- However, according to one market consumable content set. Meanwhile, tional feeds (IMD, Oct. 18 2013). data manager, “such a sustained pricing trading volumes are being sourced from “To put it in plainly, a real-time non- premium” could be seen as both “unac- MarkitSERV, which processes all OTC member professional terminal user of the ceptable and unreasonable” in competi- TRS trades. LSE’s UK core UK Level 1 data service tion terms, and also “perhaps in conflict The price data can be used for end- has seen a combined price hike of nearly with both the spirit and letter” of the of-day pricing valuation, risk manage- 14 percent in real terms… from the end forthcoming MiFID 2 regulations. ment and marking-to-market. Mean- of June 2013 to the beginning of Janu- while, the inclusion of daily trading ary 2016, in addition to a 15 percent Fair Share volumes—which are available only increase in fees for international data The LSEG’s real-time data revenues from Markit and date back to January over the same period and excluding any across the London Stock Exchange and this year—was in response to demand additional fees charged by vendors that Borsa Italiana markets fell by 11 percent from users such as banks, hedge funds, distribute the data,” says an exchange from £94.4 million in 2013 to £84.3 mil- asset managers and institutional fixed data policy expert who requested ano- lion in 2014, down from £102.8 million income investors for more detailed nymity. for 2012. Some end users suggest that information on market liquidity, Barra- To obtain a full picture of LSE Level the falls are likely a result of fewer indi- chin says. “We’ve had a lot of custom- 2, users must take both the UK and viduals consuming the data, and that the ers say, ‘I read articles about what the International datafeed, which effective LSE is trying to compensate for declining volumes may be but haven’t seen any Jan. 1, 2016, equates to £251 per device terminal numbers by increasing prices. real figures,’” he adds. per month for non-members. In com- “When looking at both the trends in The data service—which was launched parison, Euronext will charge €94 (£67) declining revenues and increases in pric- four weeks ago prior to a testing period per month for full Level 2 data from ing, it appears that the LSE is quite con- with a number of key design partners— Jan. 1, 2016, which includes the French, tent to charge more and more for data is provided to customers in an XML Dutch, Belgian and Portuguese markets. to those users who absolutely require it file. “People trading TRSs like to have Meanwhile, Deutsche Börse will charge in order to trade effectively, achieve best pricing data, index levels and liquidity €80.62 (£57) per month from Jan. 1, execution for their clients, and perform information in one place so that they 2016, for its Xetra Ultra Level 2. From other increasingly mandatory regulatory can gauge if they should stay or leave January 2016, the LSE will be nearly requirements,” says the exchange data positions. Meanwhile, the product can four times more expensive for Level 2 policy expert. “One can perhaps only be used by investors who have looked data than Euronext, and more than four then interpret such actions as cynical at TRSs before but hesitated because times more expensive than Deutsche pricing tactics, by a dominant market they haven’t had an independent price Börse. provider, that a) does not have to deal source. Before there was not a complete “Are they four times more important with any real competition and b) has yet level of information all in one file,” Bar- or liquid?” asks a market data manager at to be challenged by any pricing or regula- rachin says. a bank in London. “How else can they tory authorities.” Faye Kilburn explain their value?” Faye Kilburn

waterstechnology.com/imd November 16, 2015 3 KILBURN’S CORNER While MiFID 2 Sleeps, London Burns

In the least surprising news of my entire Euronext, and more than four times more glitch as it happened in early in the day. career at Inside Market Data, the European expensive than Deutsche Börse when the Nonetheless, any bad press for Bloomberg Commission announced this week that the fees are introduced. On top of that, the is likely good news for startup secure introduction of MiFID 2 will be delayed by as LSE’s share of trading in blue-chip FTSE- messaging provider Symphony Commu- much as a year. 100 stocks has been consistently below nication Services (see page 10). Currently, Steven Maijoor, chairman of the Euro- sixty percent this month. Received wisdom Symphony is an alternative for Bloomberg’s pean Securities and Markets Authority might have it that if your share of the market Instant Chat system but until its market data (ESMA), laid the blame for the delay squarely is decreasing, then so should the relative application store grows significantly, the two on technology. In a statement directed at value of your data. And yet, fees continue are more like David and Goliath. the European Parliament, he stated that IT to rise. Wherever you look in market data right concerns will make it impossible to meet the When MiFID 2 is finally implemented, now, “the next best thing” is just around the Jan. 3, 2017, deadline. the cost of market data in Europe will be corner. Last week, Markit and Deutsche Meanwhile, London’s burning. Or more tackled head-on, in the form on the post- Borse both invested in Illuminate Financial precisely, the London Stock Exchange’s trade consolidated tape. Back in 2012, the Management, a startup venture capital firm new fees for its Level 1 and Level 2 market COBA Project, an independent organization founded in 2014 by former Icap executive data are burning a hole in the pockets of dedicated to the development of a Euro- Mark Beeston, which is seeking to invest market data managers across the City. pean consolidated tape, proposed a model in next generation market infrastructure and The LSE’s revenues from real-time market where the cost of a tape would be €69. technology, while at APFIC, a whole panel data have been falling steadily over the past However, with the LSE’s Level 1 data alone discussion was dedicated to the fact that three years from £102.8 million in 2012 to soon to be priced at €60, it’s difficult to see many firms are now creating “innovation £84.3 million last year, likely a result of fewer how these commercials would work without labs” to create new ideas and technologies. eyeballs on data. exchanges taking a massive cut in their It seems that after years in the regulatory The cynical among us might see the price fees. In fact, it’s probably the reason COBA wilderness, budgets are finally freeing up hikes as a way to plug the gap created never gained the support of major Euro- so that firms can rekindle the flames of by these falling revenues. The even more pean market operators such as Deutsche innovation. Legacy technology providers cynical might assume that whatever losses Börse and the LSE, and was consequently and luddites be warned: You could get left the LSE is suffering on a real-time per user disbanded. in the ashes. basis might be countered by growing reve- In other news this week, Max Bowie, nues from other areas such as derived data, esteemed editor of Inside Market Data, non-display, and diversification into other has been in Hong Kong, reporting from the revenue streams such as FTSE Russell, but Asia-Pacific Financial Information Confer- then the LSE is a running a for-profit busi- ence (see page 7). Over in Asia, Bloomberg ness, just like everybody else. terminal customers experienced issues with The LSE is by no means the only venue data display on the morning of Monday, to increase fees on a regular basis, but Nov. 9, as a result of a hardware failure on compared to its counterpart incumbents, a router in one of the vendor’s US data- the UK exchange will be nearly four times centers. Faye Kilburn more expensive for Level 2 data than Most users were unaffected by the [email protected] Inside Market Data Max Bowie, Editor Katie Palisoul, Publisher Incisive Media Tel: +1 646 490 3966 Tel: +44 (0)20 7316 9782 55 Broad Street, 22nd Floor, New York, NY [email protected] [email protected] 10004, USA Tel: +1 646 736 1888 Faye Kilburn, Deputy Editor Colin Minnihan, Global Commercial Director Tel: +1 646 490 3967 Tel: +1 646 755 7253 Incisive Media [email protected] [email protected] Haymarket House, 28–29 Haymarket London SW1Y 4RX, United Kingdom Joanne Faulkner, European Reporter Dan Cloghessy, Business Development Executive tel: +44 (0)20 7316 9000 Tel: +44 (0) 20 7316 9338 Tel: +1 646 736 1887 [email protected] [email protected] Incisive Media 14th Floor (Unit 1401-3), Devon House, Taikoo Place Lauren Magliocca, Business Development Executive 979 King’s Road Quarry Bay, Hong Kong Tel: +1 646 490 3983 Tel: +852 3411 4900 [email protected] Subscription Sales Tom Riley, Business Development Executive Monazer Rashid, Enterprise License Manager Tel: +44 (0) 20 7316 9780 Tel: +44 (0)20 7316 9537 [email protected] [email protected] Published by Incisive Risk Information Ltd & Incisive RWG Inc. Copyright Incisive Risk Information (IP) Ltd & Lee Hartt, Group Publishing Director Incisive Media Customer Services Incisive RWG Inc. Unauthorized photocopying or facsimile E-mail: [email protected] distribution of this copyrighted newsletter is prohibited. Elina Patler, Head of Editorial Operations Tel (UK): 0870 787 6822 All rights reserved. ISSN 1047-2908. Constantina Sammoutis, Marketing Assistant Tel (International): +44 (0)1858 438421

4 November 16, 2015 waterstechnology.com/imd NEWSWIRES HERD

Finwire Unveils Swedish Mutual Money.Net Nets S&P CapIQ’s Sullivan Funds News Service Low-cost market data terminal provider Money.Net has hired Alina Swedish news provider Finwire has data provider Millistream. The news will Sullivan as global head of sales, a launched a third news service, dubbed also be made available to SIX’s Edge termi- new position created to allow the Finwire Funds (FWF), targeted at mutual nal subscribers. Finwire is also negotiating vendor to respond to rapid growth fund investors and asset managers, and has with several other potential distributors in demand for its services. Before signed up online retail bank Nordnet as the about carrying its news service, Hård says, joining Money.Net, Sullivan was most first client for the service. and anticipates more distribution deals will recently vice president of channel The mutual funds industry is currently enter the pipeline going forward. partnerships at S&P Capital IQ, under-served by newswires in Sweden, While not ruling out expanding its ser- where she also served as VP and key despite being a “huge market,” says Fin- vices into markets outside of Sweden, Hård accounts team lead for three and a wire chief executive, Mats Hård. says Finwire’s primary focus is to cater for half years, having joined the vendor “In Sweden, there’s a lack of information the lack of information in its domestic in 2010 as part of its acquisition of on mutual funds. All asset managers spend market. TheMarkets.com, where she was VP many hours writing different reports, but “Of course, we want to expand our and head of sales and client rela- they still don’t get it to the customer. They services—initially into the Nordic coun- tions. She reports to Money.Net chief produce lots of material and they have a lot tries and into English probably, too—but executive Morgan Downey. of knowledge, but in Sweden it’s not being I think it’s very important that we write shared—you never hear from your mutual in the domestic language. We have asset LSEG Names Former MSCI as fund companies,” Hård adds. “What we’re manager customers and we have retail cli- COO and CIO providing are the same types of stories that ents. If you want to be a Swedish newswire The London Stock Exchange Group you see on [our] newswire, but focused on company and serve the whole spectrum (LSEG) has announced the appoint- mutual funds.” of clients, then you need to write in the ment of Chris Corrado as group Finwire will generate news throughout local language, I think that’s the same in chief operating officer and Group the day—which will be created by the Finland, in Norway and in Denmark. It’s chief information officer. He will also news provider’s journalists, or rewritten important that you cater to the local mar- be a member of the LSEG Executive to provide insight specific to the mutual ket and get reach there.” Committee. Corrado joins the group funds industry—and send it instantly to This latest service adds to Finwire’s other from index provider MSCI where he consumers. two offerings for local Swedish markets: held a newly created position of chief “Sometimes we’ll interview the asset Finwire Smallcap (FWS), which delivers information officer and was respon- managers, sometimes we write about the stories on Swedish small-cap companies sible for ensuring that the vendor press release, sometimes we write about listed on alternative markets that are not provided “leading-edge products monthly reports, or if an asset manager covered by major news providers; and and services.” Prior to joining MSCI, leaves we’ll interview the new person in social media service Finwire Social (FWM), Corrado was managing director and the role,” Hård says. “A large proportion which follows trending topics worldwide head of platform services at UBS of our news is also about what the funds on sources such as Twitter, translating and where he was responsible for tech- achieve, if they buy or sell stocks…It’s a creating content that it deems of interest nical infrastructure, global production range of different news items.” to the Swedish financial community. Cur- services, application platform services The vendor will distribute the funds news rently the company produces around 100 and IT services. Based in London, to customers via Swiss data vendor SIX news stories a day. Corrado reports to LSEG chief execu- Financial Information and Swedish market Joanne Faulkner tive Xavier Rolet.

waterstechnology.com/imd November 16, 2015 5 DELIVERY TECHNOLOGIES WALLBOARD Lucera, Perseus Launch Global Nov. 17: European Trading Architecture On-Demand SDN Financial Network Summit. London. Organized by Incisive Media. Details at:

New York-based network, trading infra- banks have added more locations and waterstechnology.com/events structure and time-synchronization tech- trading desks, but now time-to-market is nology provider Perseus and high-per- much longer, which is paradoxical...it is Nov. 17–20: Market Data and Trading formance infrastructure provider Lucera slow, difficult and more expensive to add a Financial Infrastructures have partnered to new market, instead of other way round,” Technology Training. New York. launch a global Software Defined Network Percy adds. Organized by Incisive Media. Details at: (SDN) dedicated to financial services, to Lucera and Perseus’ new network has provide firms with on-demand access to addressed this time-to-market problem waterstechnology.com/training cross-asset class trading and market data. by using the global Perseus infrastructure The network, which has been in devel- and layering Lucera’s Compute co-located Nov. 26: Cossiom European charity opment for the past two years and is now computing infrastructure on top. The event. Paris. Organized by Cossiom. live, combines the Perseus low-latency, vendors have reduced network implemen- global, fiber network with Lucera’s Soft- tation cycles to no more than two days, Details: ware-Defined Network (SDN), and has down from the industry standard of 90 cross-connection points to over 241 coun- days. For example, September 2015 provi- [email protected] terparties and 53 colocation centers across sioning times for current on-net customers Nov. 27: 24 cities, 15 countries and six continents averaged two hours, 47 minutes, which European Ipug meeting. across the globe. will continue to decrease as more custom- Paris. Organized by Cossiom. Details: “Forget about dealing with bandwidth ers access the platform. and expensive hardware—a thing of the Once customers have established the [email protected] past,” says Jacob Loveless, chief executive initial connection to the network, they of Lucera, in a statement. “By creating can connect to the network’s 241 coun- Dec. 2: Data Governance Breakfast the world’s largest SDN and devoting it terparties and send orders or consume Briefing: Providing you with the tools exclusively to the financial markets, we’re market data. “Users log on to an online game-changing the culture of connectiv- secure portal and chose which counterpar- for change. New York. Organized ity that the industry hasn’t seen since the ties to connect with a click of a button extranet arrived on the Street. By being and that’s it. There’s no service delivery by Incisive Media. Details at: faster and more flexible than traditional team, no people, it’s almost instantaneous. waterstechnology.com/events service providers, SDNs now allow traders Customers don’t have to own any hard- to connect to new markets on a custom- ware or software. It’s just a secure portal Dec. 7: Waters USA. New York. ized, pay-as-you go basis.” that enables customers to make changes,” Over the past twenty years, financial net- Percy says. Organized by Incisive Media. Details at: works have been built using a combination The on-demand nature of the network waterstechnology.com/events of extranets and loose ecosystems, and this means that traders in banks or hedge funds legacy technology hasn’t been upgraded can more easily look for new alpha, and Dec. 7: The American Financial or invested in by legacy service provid- change which market data they consume ers, adds Jock Percy, chief executive and without worrying about deploying any Technology Awards. New York. founder of Perseus. equipment. "This is the Uber-ization of “These legacy ecosystems have become financial trading technology," Percy says. Organized by Incisive Media. Details at: Faye Kilburn bigger and more complex as traders and waterstechnology.com/events

SCROLLING NEWS

>>OTAS Adds Research to onboarding process makes sure that the event processing software provider RSRCHXchange Platform necessary compliance checks are carried OneMarketData’s (OMD) OneTick enter- London-based RSRCHXchange, an online out up-front so the content is available to prise data management platform into institutional research marketplace, has users instantly, officials say. its CrossAsset analytics suite for the today announced the addition of analytics management of market data. The part- provider OTAS Technologies to the list of >>Numerix Integrates OneTick into nership with OMD will allow Numerix providers offered on its research platform. Software Suite to simplify the market data integration By making its research available on the Numerix, a provider of cross-asset and management process resulting in RSRCHX platform, OTAS will provide asset analytics for derivatives valuations and a “more robust” end-to-end system managers with insight and analysis for risk management, has announced the that automates the normalization and investment decision making. The platform’s integration of tick database and complex cleansing of data.

6 November 16, 2015 waterstechnology.com/imd Inside Market Data Asia-Pacific Financial Information Conference 2015 Special Report

In this Report Panelists Call for More Electronification, Data to Fix Fixed Income Liquidity Crisis 9 Panel: Banks, Vendors Must Think Like FinTech Asian fixed income markets need greater access tronification will affect the markets in the long Innovators to timely data that electronification of the term,” said Nick Underwood, fixed income markets can provide to address the current business director for Asia Pacific at Interactive lack of liquidity, even if this means structural Data. "I think we lack enough market data. So change, lower spreads and less reliance on tradi- this is where we need more data. In the US, Top Quotes tional broker-dealers to provide access to liquid- trade reporting over TRACE changed the in- ity, said panelists at the Asia Pacific Financial dustry, and spreads came way down. I would “Innovation is not always about Information Conference. like to see a trade repository like that for Asia cool technology…. Fundamen- “We’ve always had issues throughout the re- Pacific.” tally, it often starts internally with gion. Since the 1998 crisis, we’ve seen a more Others warned about the impact on market people.” —Joseph Toh, Credit conservative approach from regional banks and structure. “TRACE tells everyone where a bond Suisse. market makers. The jury is still out on how elec- has traded. It has collapsed spreads and >8

“For people running complex strategies…wrong data has Buy Side: Complexity, Cost Top Asia Data Issues the potential to create a Flash Crash.” —Miguel Ortega, Increasingly complex asset classes, customer president of Asia sales at Rimes Technologies. Deutsche Bank. requirements and regulatory environments are “One asset manager told us that for every dol- increasing the cost of doing business for buy- lar spent on licensing data, it spends $3 more “Someone has put the idea in side firms in Asia Pacific, prompting firms to internally on managing that data.” regulators’ minds that bonds seek out solutions that allow them to com- In some areas where cost is spiraling, firms are just like equities—but pete while managing the spiraling costs of may actually review whether to stay in that they’re not.” —Vijay Chander, doing business, said panelists at the Asia Pacific business, said Roger Emms, vice president and ASIFMA Financial Information Conference. regional head of operations at T. Rowe Price. Cost control continues to be a major chal- “The cost of [complying with] regulations is “[Electronification] gives an lenge for buy-side firms. “We have a lot of con- becoming more expensive. So the front office… opportunity to ‘industrialize’ the versations with clients about what they need, may look at the cost of doing trades in certain market, which means you have and about decommissioning what they are not asset types,” he said. to be more granular and better using—understanding who is using what, and Driving cost is the increased complexity of about analyzing markets, rather how much it costs,” said Tom Gooding, vice doing business. And in some cases, added >8 than just shouting into a box.” —Nick Underwood, Interac- tive Data. Panel: Latency Matters Beyond Raw Speed

“We have the technology to Low latency is still a concern for many firms in exchanges and private trading systems. take off, fly to New York, and the Asia-Pacfic region, though some are instead “What we see from our perspective is hav- land without a pilot. But who focusing on the quality and consistency of the ing to be flexible and cater to firms’ needs. would stay on a plane without a data, and on ways to reduce server footprint and Yes, high-frequency traders will seek the most pilot? I think that illustrates the spend, according to panelists at the Asia Pacific direct form of connection… but we have more need for the ‘human touch’.” Financial Information Conference. clients coming to us with diverse requirements. —Endre Markos, Citigroup. Miguel Ortega, Asia-Pacific head of market So we find flexible delivery platforms… includ- data at Deutsche Bank, said that latency is ing consolidated feeds and delayed consoli- “If you want to change some- divided into different tiers of performance, dated feeds—for example, for back offices,” said thing, first you have to be depending on what a company or business Arthur Tricoire, director of business develop- aware of it.” —Adam Garrett, line needs—from the ultra-low latency needs ment for S&P Capital IQ’s Real-Time Solutions Thomson Reuters of high-frequency traders to the need for con- business (formerly QuantHouse). solidated feeds to power smart order-routers in Panelists also noted the importance of data fragmented markets such as Japan with multiple quality in addition to data latency. “The >9 waterstechnology.com/imd November 16, 2015 7 Inside Market Data Asia-Pacific Financial Information Conference 2015 Special Report Panelists Call for More Electronification, Data to Fix Fixed Income

<7 kicked out a lot of players [in the Dr Steve Wang, managing director and US]. In Asia, it would kick out market head of fixed income research at BOCI makers, and just the bigger hedge funds Securities, said he is seeing more participa- would survive,” said Ahsan Pervez, exec- tion from investors in the Chinese market. utive director and head of convertible Both he and moderator Vijay Chander, bond trading at SMBC Nikko, adding executive director for fixed income at the that he has already seen a concentration Vijay Chander, ASIFMA; Luke Asia Securities Industry & Financial Mar- in the number of firms he would call to Waddington, BNP Paribas; Nick kets Association, said that after the Shang- price a convertible bond—from perhaps Underwood, Interactive Data; Dr. Steve hai-Hong Kong Stock Connect initiative, Wang, BOCI Securities; Ahasn Pervez, 15 firms 10 years ago to a handful now. SMBC Nikko they are already hearing demand for a “For some over-the-counter markets like similar initiative for fixed income trading. convertible bonds, would electronifica- will collapse,” Underwood said, though Meanwhile Waddington suggested that tion improve liquidity? Probably not.” he suggested that brokers need not be opening up more channels to gather data Luke Waddington, head of electronic forced out of competition entirely, as they on client requirements could help bet- business and markets for global markets should expect to be rewarded for “under- ter match liquidity to demand. “At the in Asia Pacific at BNP Paribas, said that standing the liquidity environment better” moment, the relationship between a bank the lack of liquidity is exposing “strained” in some assets and providing services like and its client is such that if I go into a deal- business models and that in the current transaction cost analysis. ing room, I see a phone, email, and a chat cost-conscious environment, using bro- “I think electronic platforms will only tool…. But when I leave the office, I have kers as an intermediary is an expensive work for simple structures—sovereign more channels to talk with friends around model that firms might want to change— bonds and liquid corporate bonds. For the world, and I know more about them at least for some markets. the high-yield, highly structured and dis- than we as a bank know about our clients,” “I think the whole concept of electroni- tressed markets, the dealer becomes more he said. “Let’s open up more channels so fication is a good idea. In Asia, it’s still in its important, and I don’t think we’ll see the we can understand more about clients and infancy. In the US it is more mature, and same level of engagement possible with operate in a more efficient way.” has seen consolidation, so some [players] electronic platforms,” Underwood said. Max Bowie Buy Side: Complexity, Cost Top Asia Data Issues

<7 complexity is indeed prompting a multitude of regulatory pressures from firms to exit certain areas. “Benchmarks different jurisdictions while also serving are becoming increasingly complex,” internal and external “clients”—from the said Chris Vera, director and Asia-Pacific firm’s portfolio managers to institutional head of client reporting at Blackrock. clients that require reports, Emms said. “We have gotten out of the business of “It’s a challenge in terms of people, running our own benchmarks. We just processes and technology—and you have a want to pass along industry benchmarks. Chris Vera, Blackrock; Roger Emms, choice to make as an asset manager about It’s low risk and the costs are very trans- T. Rowe Price; Tom Gooding, Rimes what business you’re in,” he said, adding Technologies; Endre Markos, Citigroup parent, plus it’s operationally cheaper that T. Rowe price doesn’t see itself as for us.” being in the business of manufacturing But as some exit certain areas, data may products.” data, so seeks out third parties as much as drive new innovation to create replace- And the panel said it expects complexity possible, rather than investing in areas that ments. “We are seeing more demand for to grow hand-in-hand with data availabil- don’t add value to its bottom line. alternative investments, predictive strate- ity. “There will be orders of magnitude For example, he said he expects utilities gies, and high-yield strategies… and it may more data, and the level of detail and per- to emerge that will help firms manage be a challenge for traditional benchmark vasiveness will increase… and as a result, parts of the value chain that are undesir- providers to meet that need,” Emms said. the level of relevance will go up a lot,” able for financial firms, such as around “In fact, the role of data is driving these Vera said. “And there will be more infor- the commoditized function of regulatory products. Like the ‘Internet of Things,’ mation about how clients are using that reporting. “We have the responsibility for more data will be available, and people will data, so the level of intimacy and relevance that, but we don’t want to focus so much know more about what impact something [with clients] becomes greater.” of our abilities on doing that… and those will have on their investment, and will Everyday business complexities are com- requirements are only increasing,” he said. work together to create new investment pounded by the challenges of dealing with Max Bowie

8 November 16, 2015 waterstechnology.com/imd Inside Market Data Asia-Pacific Financial Information Conference 2015 Special Report Panel: Latency Matters Beyond Raw Speed

<7 worst thing that can happen to an the sell side doesn’t use PTP (Precision algorithm is that it makes a decision based Time Protocol) on a widespread basis,” on data that is not correct,” Ortega said. Ortega said, adding that regulations “For people running complex strategies… are “catching up” and now starting to wrong data has the potential to create a address timestamping issues Flash Crash.” In addition, the pursuit of low latency Granular timestamps and accurate clock has knock-on benefits besides raw speed, synchronization can help improve data panelists said. “The requirement for low Miguel Ortega, Deutsche Bank; Arthur quality, Tricoire said noting that these are latency makes systems more demanding, Tricoire, S&P Capital IQ Real-Time important for demonstrating best execu- and pushes providers to build better sys- Solutions; Rahim Nathoo, CLSA tion at a specific time, and for back-testing. tems. For example, you are catering to Panelists said that while implementing models that require every tick, and this force customers to deploy their own dedi- these measures can be costly, they are helps bring about the next generation of cated appliance, but are now allowing “worth it, because bad data can be danger- systems,” Tricoire said. “On the IT side, it firms to run their offerings on commodity ous and lead to disaster,” and specifically, drives us to be more creative around being hardware, making them easier and cheaper to penalties if firms fail to deliver best efficient. So with the new generation of to deploy. “Necessity is the mother of execution for clients because their data was technologies, you can manage your hard- invention. We can’t write our own FPGA inaccurate. ware footprint,” to reduce clients’ spend cards, but vendors are trying to work with “We always knew these things would be on servers and rack space. consumers to create products that are not a problem, but we didn’t have the money Contributing to this is that latency mon- so expensive,” Ortega said. or resources to invest on them…. Most of itoring technology providers no longer Max Bowie Panel: Banks, Vendors Must Think Like FinTech Innovators

After several years of being focused on data to startups, and works both with cost cutting, financial firms in Asia are individual companies and with incuba- trying to jump on the FinTech innovators on a case-by-case basis. tion bandwagon by creating “innovation Toh said Credit Suisse has devel- labs” to create new ideas and technolo- oped a “Disruption Index” of about gies to compete with technology provid- 150 startup technology companies in ers and startups encroaching on their which the bank is considering invest- traditional business. Zennon Kapron, Kaopronasia; Adam ing. “We try to look at how does Garrett, Thomson Reuters; Stuart Gurr, “We’re coming out of a period of Royal Bank of Scotland; Joseph Toh, [what a company is doing] fit into the three to five years where investment in Credit Suisse ecosystem, and how likely is it to be innovation has been hard to come by. disrupted [by someone else],” he said. Regulation has diverted much of avail- innovation for Asia Pacific at Credit However, Gurr sounded a note of able spend to that agenda,” said Stuart Suisse, adding that he sees threats to tra- caution about getting distracted by the Gurr, head of digital technology and ditional financial firms from companies “cool” aspects of tech innovation. “You engineering services and risk change like Google selling insurance or Alibaba have to be careful when running an inno- delivery for Asia Pacific at Royal Bank offering loans. “Part of my job is to be vation function that you are solving real of Scotland. “A lot of what needs to aware of some of the things going on in business problems,” rather than building change is on the back end…. It’s less markets beyond FinTech.” technologies that may be cool but for exciting than the front end, but it’s more Zennon Kapron, founder of capital which there is no practical demand. fundamental.” markets technology research and consult- “Innovation is not always about cool However, some firms have already ing firm Lapronasia, who moderated the technology…. I feel there is too much been raising the budget they devote to panel, noted that a challenge to banks focus on pieces of kit,” said Toh. “Fun- keeping pace with innovation from other and other firms that set up their own in- damentally, it often starts internally with players—both in the financial markets house FinTech labs is the cost of acquir- people, and I ask myself, what incentives and beyond. “Three years ago, our inno- ing data to build and test new ideas. do we have if one of our people came up vation budget was $5 million. Today, it’s Adam Garrett, market development with the next Whatsapp? … It’s very lim- more than $150 million… and that’s manager for Enterprise Content and ited, and yet we are trying to [encourage while cost-cutting has been underway,” Capabilities, Asia at Thomson Reuters, staff to] think like Google.” said Joseph Toh, head of strategy and responded that the vendor does provide Max Bowie

waterstechnology.com/imd November 16, 2015 9 SPECIAL REPORT Buy Side Still Taking Wait-and-See Approach to Symphony

Palo Alto, Calif.-based startup messaging provider Symphony Communication “One of the key drivers influencing sell-side Services has attracted investment from a adoption of Symphony is the ability to interact “Who’s Who” of 19 financial institutions in real-time with buy-side firms.” plus more than $100 million raised in a recent round of funding from inves- David Gurle, chief executive, Symphony tors including tech giant Google, but despite the wave of anti-Bloomberg senti- ment surrounding its creation, Symphony chief executive David Gurle continues to deny that the vendor is competing with However, according to a market data about issues at Deutsche Bank, where two Bloomberg. manager at a US investment manage- sources say deployment of the platform But is Gurle’s reticence because Sym- ment firm, Symphony’s sales team is now has taken longer than anticipated at the phony doesn’t have enough data partners targeting C-level executives at buy-side bank, ostensibly due to technical issues. to make it useful beyond just a standalone firms rather than market data departments, Symphony officials decline to comment messaging platform, or because the vendor “emphasizing the cost savings,” and is on the technical issues, only to say that the has yet to attract sufficient buy-side buy-in having some success. goal is to make the platform “intuitive and for it to position itself—like Bloomberg— Meanwhile in Europe, Symphony was engaging by continuing to develop the as being integral to financial workflows? recently on the agenda at a meeting of product to ensure our user experience is Either way, with Symphony priced at industry association the Information Pro- seamless.” $50 per user per month, many of the vider’s User Group (Ipug), which caused Deutsche Bank also declines to com- 327,000 users (according to recent figures an uptick of non-consortium firms to ment. However, one of the sources at form Burton-Taylor International Con- attend the presentation, according to one the bank says that while the Bloomberg sulting) of Bloomberg’s $24,000-per-year Ipug member who says buy-side firms platform is simple, scalable and reactive to Professional terminal—some of whom use are delaying involvement in Symphony new regulation around messaging compli- it just to communicate with the other users “because they are waiting for it to get off ance, Symphony “is getting too big, there on the network—see Symphony as a huge the ground.” are too many patches and it’s difficult to cost-cutting exercise and a way to finally While the economics of replacing a manage. It seems clunky and we haven’t reduce their Bloomberg dependency. Bloomberg terminal with Symphony been able to deploy it massively.” Prior to the acquisition of its technology might be a no-brainer for a sell-side sub- Last month, technology giant Google assets by Symphony, one of the criticisms scriber who only uses the terminal for its threw its support behind Symphony, and levied at Markit’s now-defunct Collabora- chat function, prying a Bloomberg Profes- invested in the platform, valuing the ven- tion Services open messaging initiative sional from the hands of a buy-side user is dor at $650 million. For some, the deal was lack of buy-side adoption. However, more complicated, since the terminal rep- says less about Symphony and more about according to Gurle, 40 percent of Sym- resents consolidated access to messaging, Google’s aspirations to move into finan- phony’s 45,000 users are on the buy side. trading, market data, real-time analytics, cial services, or at least—as a market data “One of the key drivers influencing sell- portfolio management, and more. manager at one of Symphony’s major side adoption of Symphony is the ability to “The buy side is entrenched in the sell-side investors says—that the platform interact in real-time with buy-side firms,” Bloomberg terminal, and it is difficult to “has legs.” he says. remove because it’s not just a market data Others are not so sure. “There is a lot Of the 10 largest investment manage- terminal: It’s also used for portfolio man- of media buzz happening around Google ment firms in the US, Blackrock, JP agement, and as a way to access tools like having a stake in Symphony, but it’s not a Morgan Asset Management, BNY Mel- trade blotters. There is still a willingness to factor in our decision. We are looking at lon Asset Management and Goldman move on the buy side, but less freedom,” confidentiality and reliability, and whether Sachs’ management arm are all part of the says a procurement manager at a Euro- the platform complies with the regulatory original consortium of Symphony inves- pean tier-one bank. framework for instant messaging,” says a tors. The remainder—Vanguard, State In addition to the value-add that a market data manager at a tier-one bank Street, Fidelity, Pimco, Capital Group Bloomberg terminal provides, many in Tokyo. and Prudential—all decline to comment smaller buy-side firms—who are not as Another market data manager at a Euro- on whether they are rolling the platform technologically advanced as their tier-one pean investment management firm says his out. In fact, investors and non-investors counterparts—are wary of the risks of firm’s decision to sign up for Symphony all seem unwilling to speak openly about deploying technology from a start-up like will be based on the actions of other buy- Symphony. Symphony. side firms, rather than Google. “If we start Aside from the original consortium But if the buy side is waiting to see seeing a shift and the community is some- members, the official US buy-side adop- what happens with sell-side rollouts, they where else, that’s the start of the domino tion of Symphony has so far been slow. might pause for thought after hearing effect,” the manager says. However, he

10 November 16, 2015 waterstechnology.com/imd SPECIAL REPORT acknowledges that there is a great appetite transparency around what constitutes an more conservative tier-two and tier-three for Google to enter the capital markets as “active user,” and how many users sign up banks who are wrestling over budgets; “they can do things smarter and quicker but never actually use the platform to chat. the smaller buy-side firms who are wait- than we can.” Founding members like Goldman Sachs, ing to see what everybody else does; and Overall, market data managers seem to Blackrock and JP Morgan are rumored those who see the Goldman Sachs-backed be just as divided over the significance of to be replacing their entire internal and vendor as a Bloomberg dressed in sheep’s Google’s investment in Symphony as they external communications infrastructure clothing. are about the platform itself. with Symphony. Goldman Sachs alone Symphony meanwhile is plowing ahead has 34,000 employees while Blackrock has with its own mission to expand staff num- By the Numbers more than 10,500, according to the firms’ bers and its global presence, and create Symphony currently has 45,000 active most recent annual statements—which an app store for market data, following users on its platform, 40 percent of which together could almost account for Gurle’s the addition content of Dow Jones, S&P are from the buy side, Gurle says. The ven- 45,000. Capital IQ and Selerity in September. dor has also signed up 30 new companies More likely is that firms will roll out Gurle does not envision that the vendor this quarter, and now has approximately users in phases, while others, like Deutsche will become an aggregator, creator, or dis- 100 companies onboard beyond the exist- Bank, are still fixing issues with their initial tributor of data, but rather will reestablish ing consortium of investors, he says. rollout. But the message from the investor the direct link between consumers and At first glance, 45,000 active users for a firms is clear: “The companies who are data providers. start-up seems impressive, especially com- part of Symphony are committed,” says Either way, Symphony’s remit is expand- pared to Bloomberg’s 327,000 estimated one consortium member. ing. The vendor is no longer just provid- users accumulated over 35 years in busi- And that seems to be the rub for Sym- ing an instant messaging platform, but ness. But who makes up that 45,000 phony. On the one hand, the vendor is morphing into a data facilitator with a figure? The vendor declines to disclose the has an indomitable list of heavyweights consumption model that, quite frankly, the breakdown of institutional/corporate cli- in its corner, from Goldman to Google, market data industry has been demanding ents versus retail users, or the breakdown but in the other corner is everybody for a long time. So perhaps it is only a mat- of financial services versus non-financial else—tier-one investment banks who have ter of time before those firms still on the services clients, since the platform was already developed their own internal mes- fence decide that the grass is greener on only released officially to non-consortium saging systems to ensure compliance and the other side. members in September. There is also little don’t need another vendor platform; the Faye Kilburn

ORGANIZATION & STRATEGY RSRCHX Preps for Hiring Spree, Content Push Research marketplace RSRCHXchange is change chief financial officer Jeremy regularly assess a research budget.” This, preparing for both a hiring and content Davies. The ambition isn’t to have along with technology advancements push following a “rapid” pickup since the every provider in the world, but to which have streamlined the aggregation release of its online research procurement continue to add some “very big provid- of research, means there is an appetite portal in September, which was launched ers… at the quality end,” he adds. from the financial industry for a research ahead of the implementation of MiFID In terms of staff numbers, the vendor’s marketplace, Davies says. 2 to help firms deal with the unbundling team is into “double digits,” which is “Lots of the big asset managers will of data. currently split between development and tell you that they’ve been unbundled and The amount of research providers the sales teams, and a transition team, which budgeting for a while, but budgeting platform boasts has grown from 50 on helps to bring on research providers and gets a little more complex under MiFID its launch date to over 100, as of last clients. Davies says RSRCHXchange is 2… One of the operational issues around week. RSRCHExchange will now focus “always hiring” to support the vendor’s giving asset and fund managers the free- on building its client base, not only in high growth, and is looking to take on dom to go out and purchase their own Europe, which is a natural fit because of more sales and technology staff to cope research is it’s not something they’re used the impending MiFID 2 regulation, but with the demand. to—that’s an operational concern that also on other continents, such as Asia, Historically, the research marketplace needs to be controlled and spending caps where the vendor has three providers in has been a tough arena for independ- are part of that,” Davies says. the pipeline. ent research firms with the big players While ESMA has come out this week Whilst the company has set no inter- often giving their research away for free, to say sections of MiFID 2 maybe delayed nal goals in terms of the number of Davies says. However this must stop due to “the building of some complex IT providers it carries, the aim is to have under MiFID 2 as banks and brokers systems,” research unbundling is a rela- hundreds of “quality” research provid- will no longer able to give their research tively straight forward implementation ers on board rather than thousands by away free-of-charge. The legislation also and is unlikely to be slowed, Davies says. the end of next year, says RSRCHX- states that investment firms must “set and Joanne Faulkner

waterstechnology.com/imd November 16, 2015 11 ORGANIZATION & STRATEGY INDUSTRY ISSUES Markit, Deutsche Börse Bloomberg Asia Interruption

Invest in Illuminate <1 the hardware component issue, you are not disadvantaged Financial information services provider Markit and within the router that manages because there is no one to trade exchange group Deutsche Börse have invested an monitoring and control func- with. So it was not such a big undisclosed sum in Illuminate Financial Management, a tions—failed, and tried unsuc- problem. So long as we don’t startup venture capital firm founded in 2014 by former cessfully to fail over to a second suffer any reputational damage or Icap executive Mark Beeston. control board in the same router. lose opportunities, it’s not a big Illuminate announced last week that it completed In the client notice, Bloomberg deal for us,” the executive says, the first round of capital raising for its new IFM Fintech officials apologize for the incident adding that “This happens a lot Opportunities Fund, which seeks to identify, validate and and say the vendor is working more with other vendors. I think invest Series A and series seed funding into financial with its unnamed hardware sup- Bloomberg has better technology technology vendors serving the capital markets and plier to determine “what caused design.” market data space. Markit and Deutsche Börse are the control board to malfunction However, a data manager at investing in the fund, but will not necessarily have a direct and why the failover mechanism another bank is more cautious holding in any company Illuminate invests in. did not execute successfully.” about the longer-term implica- Currently, the fund is in talks with over 300 companies, Monday’s incident follows a tions of the incident, saying that around thirty percent of which are data and analytics more serious outage earlier this his firm was hopeful of replac- related, says Beeston, though many of the firms do not year (IMD, April 17) that saw ing traditional mandated “Bai- fit squarely into market data, but instead focus on a range thousands of Bloomberg users in kai” exchange workstations with of data technologies including blockchain, compliance, Asia and Europe affected by hard- Bloomberg screens. Firms in Big Data and trade execution. ware and software failures that Japan are required to have these “We invest in capital markets technologies in areas precipitated excessive volumes of terminals, which can prove expen- that are broken or rendered no longer fit for purpose. We network traffic, causing terminals sive when added to other ter- only invest in areas where we can actively influence the to disconnect from the vendor’s minals. Bloomberg has recently outcome… that’s what drives how we work and who we network. integrated the ability to perform work with. In terms of investors like Markit and Deutsche However, Monday’s incident the role of those “Baikai” termi- Börse, they have a massive footprint in this space and a was resolved before it could seri- nals, which the data manager says huge number of clients. It’s a pathway to innovation for ously impact Asian market hours, could save his firm a lot of money them…a way to gain exposure to these kinds of new let alone the European timezone. by using its existing Bloomberg platforms and the next wave of next gen market infra- A data executive at a tier-one positions, adding that the outage structure,” Beeston says. Markit and Deutsche Börse bank impacted by the issue says makes his firm concerned about both decline to provide further comments on the data the disconnections and slowness completely replacing the tradi- and analytics technologies they are interested in. lasted around 90 minutes. tional workstations. Faye Kilburn “Luckily, if Bloomberg has an Max Bowie

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