Max Bowie: Colleagues, Consolidators, Where Are They Now?

Along with bidding farewell to colleague Jake Thomases, we also recently bade farewell to a closet of vintage copies of Waters magazine from the 1990s, including the spring 1995 issue, which celebrated the 10-year anniversary of Inside Market Data. The pages of ads were a who’s-who of the data and trading technology industry in 1995, but which might be alien to someone joining the industry today, as companies disappeared over the years through consolidation, failure, or moving into different business areas.

Here’s an abridged list of advertisers from that issue: ADP, which would exit the market data business; FirstCall and Worldscope, both ultimately acquired by Thomson Financial. TCAM Systems (with testimonial by—ahem—Peter Madoff of Bernard L. Madoff Investment Securities), was acquired by OM Technology before it became OMX and merged with Nasdaq; S&P Comstock sold its Comstock real-time business to Interactive Data, later returning to the real-time space with the acquisition of French low-latency infrastructure and data provider QuantHouse; Dow Jones eventually divested its once-grand-now-toxic Telerate business to Bridge, which went belly-up in 2001, splitting the assets between Reuters, SunGard and Moneyline, which itself was allowed to fester and wither before being snapped up by Reuters at the start of 2005; once news-powerhouse Knight-Ridder was also acquired by Bridge and suffered the same fate, though its name lives on outside finance through its newspaper business, which was bought by The McClatchy Company in 2006. There was also an ad from Bridge itself, with the headline “Searching the Universe” (for profits, no doubt), along with a separate ad for subsidiary Market Vision.

Original Big Players
Of the original advertisers from 1995, the big players that remain are Standard & Poor’s, and Moody’s Investors Service (even Reuters was bought by Thomson Corp.), while Telekurs (now SIX Financial Information) underwent reorganizations of the same group of owners, ultimately becoming part of SIX Group, which also operates the Swiss Exchange and Swiss clearing and settlement utilities.

Of course, this is only some of the industry consolidation that’s taken place over the past 20 years. In Europe alone, what was once a vibrant patchwork of mid-level providers—such as AFX News, CMS Webview, CSK Software, Ecovision, Ecowin, Gissing Software, GL Trade, Hemscott, Infotec, IS Teledata, Knowledge Technology Solutions, and MarketXS, among others, not even getting into those outside Europe—has over the past decade or so been purged to a much smaller and more centralized range of providers.

Another feature of that 1995 edition was a series of articles by industry execs—including none other than Michael Bloomberg—listing their predictions for the industry. Notably, ILX founder Bernie Weinstein (now executive managing director at BGC Partners) predicted (among other things) that by 2005, Dow Jones would be acquired by Rupert Murdoch, Michael Bloomberg would have left his eponymous vendor, ADP would no longer be in the market data business, that exchange fees would outstrip the price of data terminals, and that the Quotron 800 terminal would make a comeback among antique collectors—some of which eventually came true, even if Bernie didn’t predict that ILX would be acquired by Thomson Financial.

In Europe alone, a once-vibrant patchwork of mid-level providers has over the past decade or so been purged to a much smaller and more centralized range of providers.

Filling the Void
Hopefully, some of the existing and new vendors making their mark can rise to fill the void that these others left behind. Sometimes, consolidation breeds companies of a scale to create greater competition. Other times, it simply kills competition. And unfortunately, the economic circumstances of the past few years have been more conducive to “purging” rather than fostering and investing in innovation—defunct bond pricing start-up Benchmark Solutions being a case in point. Bloomberg and Telerate (in its golden years) didn’t merge their way to success. If we want more Bloombergs and Telerates, the industry has to innovate—not consolidate—its way out of the current stagnation.