3.0 Counting the Costs, Questions of Exposure
Regulators are now demanding higher standards when using market data and price information, that means knowing where the data comes from and who owns it. Clear line of sight to the owner is often not there owing to reliance upon intermediaries.
Equally it is business common sense to understand where the data and information that drives investment decisions actually comes from. Simply looking at a Bloomberg screen and saying “My data is supplied by Bloomberg” may be technically accurate, but only tells part of the story, and leads to IPR misunderstandings. Bloomberg, like all the other market data vendors have to get that market data from somewhere.
But where does the ownership trail lead?
3.1 Calculating Data Source Exposure
Exposure analysis to understand how much is being spent with specific vendors not only at a contract level but also at a group level. Too many data aggregators, ISVs, and financial institutions have a fragmented, and incomplete view of their suppliers’ universe.
Case Study 1. Company X which has the following exposures to group companies but treats each supplier independently:
What this translates to is 5 areas of reduced business efficiency.
The same scenario is repeated across multiple diversified information providers including Standard & Poors GMI, CME Group, and ICE, and is likely to increase with new entrants into the market like Google, or IHS through purchase.
As seen in Case Study 1, Company X was not analysing its exposure to the entire London Stock Exchange Group but just treating each subsidiary as a distinct individual entity. LSEG has a functional, flat structure, but recently bought Mergent through FTSE Russell, so provides a good study of the indirect relationship chain that occurs.
The ownership becomes a trail with a natural ending and the relationship flow is now a known quantity.
A clear line of sight now emerges from the relationship fog.