The Best Approach in Asia: Local or Global?

Data vendors must combine the market knowledge of local experts with the scale of global businesses if they are to succeed in breaking into the Asia-Pacific markets, according to participants in a roundtable discussion dubbed "Local vs. Global" that took place at last week's Inside Market Data Asia conference.

The conference was one-half of the Asia Financial Information Summit, hosted jointly by IMD and the FISD.

Vendors need to take a different approach to other regional markets because Asia has several unique characteristics, panelists told attendees.

"A snapshot of the Asian market doesn't necessarily mirror other markets—as it is not one country, there is no single regulatory framework as there is in Europe," said Rory Manchee, managing director of securities services for Asia-Pacific at Standard & Poor's. "It's not just a question of adopting the models of other markets…. Certainly a global brand is important, but a local player may have very deep local knowledge—though the question for them is how you grow outside Asia."

"From a market data perspective, the regional characteristics are far greater breadth of data and analytics across multiple markets," said Mark Benfield, director of business development for market data services in Asia-Pacific and the Middle East at Icap. Benfield also noted that the region has a number of idiosyncrasies.

For example, until now, many Asian customers have been able to find cheap or free data to perform critical tasks, said David Crammond, chief executive of Markit Asia. "The challenge for global players is coming in at a different price bracket from New York, for example, when firms here think they can do it themselves.

And it is taking market forces and the attraction of international investment to change this mindset, Crammond said. "Customers are beginning to realize that it costs money… and if you don't have independent valuation data, it's going to be hard to attract funding. Doing it yourself or pulling that data off Bloomberg isn't good enough anymore," he said.

When moderator Keiren Harris highlighted the fragmentation of the region's markets—an issue that reoccurred throughout the conference—Ian Tham, head of Asia-Pacific sales for Tullett Prebon Information, noted two main issues. Echoing Manchee, he said that one is the differing regulatory environments within the region, while the other is simply obtaining data.

"A lot of our products and services are global in nature, so we can deliver them in the same formats and delivery options, but we still have to work at finding the best fit for each market… so there is a lack of consistency sometimes in the products you can deliver," Manchee said.

And though consistency and transparency are goals that the region is working towards, the main attraction for foreign investment seems to be that the markets are still somewhat opaque and represent an opportunity for firms to trade while their maturity can give them an advantage over local players.

"Yes, as a market participant, you want as much transparency as possible… but sometimes you don't want too much transparency," Tham said, referring to the fact that spreads can still be quite wide in the region, and hence profitable for brokers.

But on the other hand, Tham said, local vendors are prepared to chase low-margin business that does not provide sufficient return on investment to make it worthwhile for global players to pursue.

However, some local vendors still go too far in the pursuit of revenues, raising the ever-present concern of data piracy. "We've seen cases of under-reporting where clients thought they owned the data," Tham said. "In Asia, this is unique: People used to just pull data off Reuters and use it all over the place."

"It needs education on the investor front… that this is proprietary data," said Crammond. "We have gone after investment banks that fax our information to their clients—and if they are one of our investor banks, then they are actually hurting themselves. We're new to Singapore, and we can see data leakage already…. We just have to drill it into customers' heads that it isn't their data until they sign a contract and pay for it—and that until they do that, it's theft."