(wrap-up of the panel discussion ‘Market Data Management Post Credit Crisis’ hosted at the ‘Screen Markets – Amsterdam’ event)

24 September the annual Screen Event in Amsterdam, hosted by Screen Consultants, took place. Theme of one of the panel discussions was ‘Market Data Management Post Credit Crisis’. Four European market data specialists gave their views on market data management practice.

Chairman Kees Brooimans from Screen Consultants started off on the cost theme.
‘What is your view on the market data audits as recently proposed by large market data vendors, the idea being that the vendor helps the customer control market data spend?’

Thomas Duveblad, Market Data Manager at Svenska Handelsbanken in Stockholm, states that the bank accepted the offer from a vendor but it did not bring them anywhere. Charles Hermans, Head of Market Data Management at HypoVereinsBank in Munich, told a vendor that if the goal of the exercise was to end up with more terminals the vendor would not be welcome. Other vendors offered their workstations for free(!) should the client cancel a competitor terminal, a naive approach in a time span where layoffs result in redundant market data services.

“On the other side it is also the user organisation that has to become more aware of cost of services used. Little action is undertaken by organisations to make users aware of the cost of services”, says Nick Murphy, Market Data Specialist at ING Investment. “Vendor services are like shoes in your closet. It is easy to buy shoes but once you have them they tend to stick around for long time, even if you do not wear them. Despite this, ING Investment Management continues to look for quality niche players.”

“When markets improve, cost of market data will go up again. At HVB we make use of cost buffers and have implemented a One vendor policy on the desk in the trading room. Traders and sales staff have a distinct preference when asked what service they would favor”, says Charles Hermans. “Nothing much has changed in that respect since I conducted market data projects for Screen Consultants and joined HVB in 2006.”

André Kelekis, Market Data Strategist at BNP Paribas in Paris, thinks the One vendor policy does not make any sense as no basis can be defined upon which it can be decided why a user should have one or two or more vendor services on his desk. “At BNP Paribas we benchmark all positions against their peers and we look at cost of support staff to maintain the market data services in place.”

On the issue of data quality the market data specialists agree that it is not only the sheer quality of the data used but also the responsibility of the user organisation and systems in place that play an important role: loading and updating 30 million data series in a central data repository and getting some meaningful output are two different things. “Just taking the data for the sake of it, is pointless”, says Nick. “Those days are gone. We want quality data and will take more than one source if needed. We are becoming more and more aware of the data sets we are taking and why.” Kelekis adds, “Quality is a process created from the beginning. Look at the originator of the data sets and start there. That will prevent a lot of checking and repairing in the future.”

Brooimans: ‘Has it become easier to discuss your market data issues with vendors these days?’

Hermans: “At the end of the day it is important to have a stable relationship with vendors both in good and bad times. See it as a marriage.”
“But you have to marry the right vendor!”, Thomas says.
Nick adds that for the first time in history he had a fruitful meeting with the European Sales manager of a major vendor that is notorious for its inflexibility.
André thinks the relationship does not go any further than a business partnership and that’s it. “It is not possible maintaining a marriage with 1000 vendors or so.”

Brooimans on the organisation of market data management: ‘Have you been able to organise your market data management on a global basis?’

Thomas: “By organising market data management and continuous communications with local managers it is possible to control market data on a global basis. Currently we are at 85 to 90%.”
“At UniCredit group, parent of HVB, strict procurement rules are adhered to which help control market data costs too”, says Hermans. “Be patient and stubborn.”
For André Kelekis it is maintaining strict data governance that helps control market data. “How do you want to go where and what data is needed for that; what is steering the use of market data in your company? IT and the users? Amazingly, management is not involved at all. The action would be to mobilise all stakeholders and increase their knowledge of market data, processes and ultimately vendors. Certification in this area would add value. Shared platforms such as the EDM council are helpful too.”

Brooimans shows market shares of the main vendors (all data, real time and reference) and asks the panelists what the figures will be in three years.

André thinks Bloomberg will gain and that IDC is too low on the current ranking.
Thomas is not sure but thinks it will depend on product developments at Thomson Reuters and Bloomberg in the coming years if figures will really change.
What all agree on is that the revenue streams at the major vendor are likely to continue to moving away from the terminal business into the direction of enterprise data.