2.2 Information Providers: Billionaires & Millionaires
For the Year Ending 2015 the leading Information Providers revenue for all services which can and do include non-market data activities totalled US$32,320 Billion, comprising of:
- The top 6 ‘Billionaire’s Club’ US$29,790 Million.
- The ‘Tier 2 (next 5) Club’ US$2,530 Million.
Source Thomson Reuters
This excludes significant global players like MSCI, FIS Global, the Exchanges (though IDC is included above as separate from ICE), Inter-Dealer Brokers, large players from Asia, and the plethora of smaller information providers that exist largely under the radar outside their own specialist markets. These will be discussed in more detail in upcoming instalments.
Information Providers in Context
The reality is the financial information industry is dynamic and it is difficult to label companies simplistically. So rather than attempting to put each company in a ‘market data bucket’ we categorised them all (simplistically) as information providers and facilitators that provide a wide and expanding range of services that ‘oil the engine’ of financial markets.
Instead of splitting out component units, we view these businesses as information providers in their entirety as there are synergies, even if certain vendors seem unable to exploit them as meaningfully as they could.
In these terms the Thomson Reuters, S&P Globals, and now FIS/Sungard and IHS Markit are not conglomerates with multiple distinct business lines, but conglomerates combining original market data with data manipulation, analysis, systems, news, trading platforms, and other tools which assist financial institutions and the retail market to make
Their services provide 3 levels of functionality:
- Data and tools to aid in creating investment decisions and strategy.
- Processing of trades throughout the trading cycle from pre- to post- trade.
- Facilitate accurate market reporting.
What is noticeable is these are very much the leading players that were around 30 years ago, albeit a lot has changed since then owing to mergers, acquisitions, corporate re-brandings. Some information providers have preferred to grow organically with the odd strategic purchase, i.e. Bloomberg, and Factset, while others have proven more acquisitive like Interactive Data (IDC). Yet many have been assimilated into the amorphous blob best known as Thomson Reuters, including Bridge Information, Datastream, Teknekron, Telerate and most recently REDI.
However, will these be the same leading players in 5 or 10 years-time? A revolution is underway, new entrants with new philosophies, new technologies, are investing in financial markets opening new doors to new opportunities.
Success and Failure
But can they succeed? The Uber revolution cannot be readily applied to market data, the supply and demand mechanics are fundamentally at odds with the world of fiercely protected IPRs and stringent regulations. Please see our upcoming article ‘Why Market Data Cannot Be Uberised. For Now’.
There is no stopping innovation, but the inbuilt strengths of incumbents will be hard to overcome. Bloomberg and its embedded universe of clients, Thomson Reuters and its ubiquitous ‘Thomson Reuters Enterprise Platform’, and the effect of the humble ticker symbol which makes it very hard to change vendors when how many systems are impacted just through having to change the ticker.