Friday, June 11, 2004

The 2004 Securities Industry Association Conference: The Changing of the Guard

It's yet another old home week at the Hilton for the Securities Industry Association's annual Technology Management Conference, but there's not much old left in the halls these days. The days of lookalike quote displays from dozens of players is largely behind us, with a plethora of new and smaller vendors filling the voids left by the consolidation of many of the major names in financial content. Strong rumors of the Reuters acquisition of Telerate and Thomson absorbing FactSet were swirling about the show but leaving little in substantial evidence. Those majors still surviving are less focused on hawking technology and more intent on providing solutions that meet the needs of specific user groups. Even Sun Microsystems, which in years past squeezed dozens of application displays into its sizeable footprint, has opened up their exhibit space to give people room to sit down and hear the gospel of solutions selling. The financial content industry is in listening mode to pick up the buy signals from the trading floors and sales offices in the financial marketplace, because the traditional channels are increasingly defunct or difficult to locate. IT departments still figure into their plans in a big way, but being able to find unique sources of content that can meet the needs of specific audiences is increasingly a task that requires an appeal to the users who are driven by their content. Thus you have a player like Connotate Technologies offering the appealing proposition of mining the Web for content that can get a beat on typical wire services and data feeds, with interfaces that can allow a clever but non-techie analyst to set up streams as well as more industrial-strength capabilities for back offices. Business process efficiency is still a major draw, but with most T+1 plans already well under way the industry seems to be more focused this year on compliance mania on many different levels, drawing in content management firms in much more strong numbers. There are as always some neat content visualization tools, but the toy of the show so far is the Blackberry stand, demonstrating some sophisticated financial analysis tools for the mobile trader.

In a marketplace that's in dire need of protecting its margins and playing by a galaxy of new rules, financial institutions are eyeing new ways of acquiring and managing content that promise both efficient markets and effective operations. Here are a few of the key tidbits we gleaned in our wanderings at the show:

Tickers get Sexy Again - For a Millisecond
Reuters realtime datafeed developers are no doubt heartened that the sub-millisecond latency performance for their flagship RMDS realtime datafeed platform was a prominent piece of good news for the Fleet Street gang at the show, but it indicates the quality of competition out in the marketplace trying to whittle away at latent trade and quote "ticks". Bloated server architectures and message formats (sorry, MDDL) are not the preferred solutions for feeds in these days of ever-thinning trade margins; leanness is the name of the game for realtime content delivery more than ever before. In the meantime vendors such as Hyperfeed continue to position their clients for effective delivery solutions via direct exchange feeds, but it's still a challenge to convert clients who are so heavily invested in solutions that provide known returns on feed management infrastructure. But all indicators point towards more disaggregation of realtime content sources as delivery networks become more capable of managing feeds from far and wide and the major investment houses reach a "tipping point" in dealing with direct feeds via common carriers more efficiently over the next eighteen months. Could be that the "new" Telerate has completed its new ticker plant just in time for the lights to go out again on realtime data.

It's All Over for IM - Unless You're Already In
While secure and auditable instant messaging was still a major focus of attention at this year's show, the consensus seems to be that Communicator and other early movers have locked up the lion's share of basic messaging infrastructure. Nobody wants to contend with multiple IM solutions any more than they want to have a multiplicity of quote vendors, so the basic stage for messaging is already well established. But there's still lots of room for growth in value-add services in an IM framework such as Parlano's announced deal to provide their collaborative messaging environent on Communicator's Connex messaging platform. IM's importance as a content development and delivery platorm will only increase as the need to structure content and personal relationships into more sophisticated paradigms to serve the institutional trading environment evolves. The old truism "I trust, therefore I execute" is beginning to drift away from trade execution channels and into the parallel hands of content vendors and trade execution specialists, creating huge vulnerability to the sell side's margins. IM offers the sell side a potential route out of this dilemma, but it will take some sophisticated content-mongering to make it happen.

Unstructured Content Comes Front and Center
With compliance concerns replacing Straight-Trough Processing and T+1 trade clearance as the financial industry's current worry beads, it's not surprising that much of the space formerly occupied by market data solutions has been nabbed by folks selling products addressing compliance issues. From secure, auditable and searchable email archives to off-site storage and data center solutions to indexing and data mining, getting a hold of content from formerly off-the-map sources and being able to exploit it and manage it efficiently is at least as important to profitability in today's financial marketplace as getting a few fractions of a second shaved off of a ticker feed. Even the U.S. Postal Service is getting into the act, with a service backed by technology from AuthentiDate that provide a legally accepted "postmark", identity and electronic signature capability that promises to offer a broadly available method to authenticate personal and personalized content. It's a clever rethinking of the USPS' basic mission in the marketplace - providing secure delivery of content from individuals and institutions - that may provide unstructured electronic content an important push to complete institutional legitimacy.

Sometimes Speed is All About Relevance - or So Says Relegence
What good is getting that hot news story out on the wires if it takes a trader forever to find it and act on it? The folks at Relegence were demonstrating an increasingly sophisticated range of tools to help users filter content from vendors and internal sources with easily manipulated mechanisms to highlight content relevance at the click of a mouse button. This emphasis on highly efficient filtering of all content inputs is gaining followers on many fronts, so a tools such as Relegence's FirstTrack service is bound to gain a broader array of adherents over time. But is FirstTrack a product or a feature? Relegence is in essentially the same bind as NewsEdge found itself not too long ago, with some interesting technology but not a terribly broad business model on which to sustain itself. The product is looking better than ever, though, so expect a major to pick up this property before too long if they don't get some additional financing to take them to the next level of independent market penetration.
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