London Calling: TP Icap’s Sinclair Eyes Client-Driven Data

Through that exercise, Sinclair “learned very quickly that the firm needed a dramatic overhaul to become more client-oriented.” He says the realization anchored his approach as he led the growth of the Canadian exchange’s data organization after TSX became a for-profit company. Sinclair was with TSX when the exchange merged with the Montreal Exchange to create TMX Group in 2008, and under his leadership, Datalinx revenue as a percent of total TMX revenue grew from 13 percent to more than double that today. 

“The client experience is critically important if you want to adapt and grow,” Sinclair says. This core philosophy underpins his approach to his new role as CEO of the Information Services data and analytics division of TP Icap, the world’s largest interdealer broker. “All of TP Icap’s product decisions will be client-driven.”

Though his new office is 37 floors up with an elevated view of the building known as The Gherkin and the rest of London’s financial district, blanketed below, Sinclair earned his stripes on the ground floor in sales, and understanding the value of the client experience. He was a senior sales executive at Canadian data vendor IP Sharp when it was acquired by Reuters in the mid-1980s, and then stayed at Reuters for 16 years as vice president. Prior to TMX, where he was most recently president of its Market Insights division, Sinclair was executive vice president of global sales at Sanchez Wealth Management, which he joined as a result of its acquisition of Spectra Securities Software.

‘A 150-Year-Old Start-Up’

Focusing on Sinclair’s growth numbers at Datalinx perhaps understates the magnitude of TMX’s transformation during his 14-year tenure. Currently the ninth-largest exchange in the world, the Toronto Stock Exchange was founded in 1861 and operated as a not-for-profit organization for nearly 150 years, becoming Canada’s sole exchange for the trading of senior equities in the late 1990s. Sinclair joined in February 2003, just a few months after its November 2002 IPO, when the “sleepy not-for-profit” demutualized and became a for-profit company. 

“For the first time in 150 years, they were dealing with shareholders and needed to produce earnings,” Sinclair says. “TMX was a 150-year-old start-up.… That was a dramatic change in culture.” 

When he joined the team, Sinclair says there were two camps of people at TSX: those who had been with the exchange for a long time and “who frankly worked very similar to working for a government because the organization did not need to produce profits”—in fact, if it produced profits, the exchange would freeze trading fees until it used up the surplus, he adds—and newer executives who came on board with a for-profit mindset, trying to produce shareholder value, improve service to clients, and compete. 

The stock exchange’s transformation was far more than a strategy shift: Sinclair was overhauling a component of an entire nation’s identity. TMX outdates the Canadian Confederation itself—established in 1867—by six years. 

“Every country tends to have an exchange, a flag and a currency, and it’s usually in that order,” Sinclair says. “[TMX] was very much a symbol of sovereignty to a world where there was increased competition, and fragmentation was leading to hyper-competition and exchanges needed to adapt. So being a for-profit entity was an important structural step, and culturally we needed to transform from being a more government services-oriented organization to one where we had to serve shareholders and our clients more effectively.” 

That transformation took place from the ground up because “at the exchange there was no sales team and no thought of having people on commission,” Sinclair says. “The idea of customer service was something that needed to dramatically improve…. People aren’t calling to renew their passports, they’re calling because they want to buy the exchange’s products and services.” 

To position TSX for a competitive world, the first step was to build a global sales team to deal with the client base and respond to its unmet needs. From there, TSX diversified and provided content about other markets and other asset classes, including taking on the role of Securities Information Processor (SIP) for Canada, similar to those that collect data for the Consolidated Tape Association and Unlisted Trading Privileges (UTP) plan in the US. 

“We were actually on a mandate from regulators to create the consolidated tape service that responds to the needs of Canada, which is based on depth of book rather than top of book in the US.… It is a far richer challenge to meet the needs in [the Canadian] market than it is in the US.,” Sinclair says, adding that TSX captured content from its competitors, as well as from other markets, and built infrastructure services to support high-frequency trading (HFT) in the Canadian market. “Responding to that need for speed was a big technology challenge, and a great opportunity for us.” 

Yet TMX still did not have the same visibility as big exchanges based in New York or London—and to an extent, culturally, the Canadian exchange was fine with that. “I think culturally, we’re an understated society,” Sinclair says. 

Meanwhile, change continued apace: TSX struck a deal with Standard & Poor’s (now Dow Jones Indexes) to create the S&P TSX 60 index, marking S&P’s first global partnership with an exchange, and also became the first exchange in the world to launch exchange-traded funds (ETFs). “It was a great ecosystem because we had ETF trading creating velocity trading for the underlying stocks,” which in turn allowed the exchange to build data products based on that to further enrich the ecosystem, with fees earned from selling the data driving trading in the marketplace. 

“We tripled the size of the business, improved the margins, and got to 98 percent market share, and what were we going to do next?” Sinclair says. What came next certainly got the market’s attention.

London Relocation, Deferred

In February 2011, the London Stock Exchange (LSE) announced plans to merge with TMX, an historic merger that would have created a dual stock market listing of a combined 6,700 listings, making it the world’s largest exchange by numbers of companies trading. 

It didn’t happen. 

It was close. LSE needed—and secured—approval from 50 percent of its shareholders. But TMX required a “super majority” of 67 percent. Ahead of the TMX shareholder annual meeting in July 2011, Sinclair says they only had 55 percent support, so TMX opted out of putting the merger to a shareholder vote. 

“The deal did not happen, and then the alternative bid superseded it,” he says, referring to a rival bid from the Maple Group, a consortium of major Canadian banks and pension plans. 

He acknowledges that there tends to be a lot of political opinion on exchange mergers, citing the Singapore Exchange’s 2011 attempt to acquire the Australian Securities Exchange, which was blocked by an act of the Australian Parliament. 

“That’s how politically sensitive mergers can be,” Sinclair says. “There have been a lot of challenges for global exchanges to merge… a lot of them have struggled.” He says TMX and LSE anticipated regulatory review with “the added dimension of political interest that the exchange is a national asset,” and attempted to create a merger with a “plurality point of view, where Canada would have been well-represented” by appointing TMX executives to serve as the new organization’s president and CFO, and Sinclair as head of the combined information services decision.  

Regardless, Maple Group’s cash-and-shares bid of C$3.7 billion won the day, creating a “vertically integrated national exchange as an alternative to a transnational exchange and tie-up with the LSE.” Although Sinclair says he would have preferred the TMX/LSE deal, the Maple deal was still “a positive step forward, a very good transaction.” 

And so, Sinclair left TMX in 2017, retiring from the exchange as the longest-standing executive.  “It was a lot of fun, turning [TMX] from a not-for-profit to a for-profit company. We really transformed the organization, but the job was done,” he says. 

But retirement didn’t last long. Sinclair says the opportunity to join TP Icap unfolded very quickly. “Here I am—six years later than I planned, but here we are in London and loving it.”

‘Enormous Opportunities’

Like his start at TMX, Sinclair joins TP Icap soon after an overhaul—the November 2015 acquisition of interdealer broker Icap’s global hybrid voice broking and information business by rival Tullett Prebon. The remainder of the former Icap brokerage is now known as NEX Group. Following the acquisition, Tullett Prebon changed its name to TP Icap and is now the world’s largest interdealer broker. 

Sinclair replaces Frank Desmond, who left TP Icap after 12 years, and reports to group CEO John Phizackerley—a “great boss” who has “built a really good senior executive team,” which includes CEO of global broking Nicholas Breteau, CEO of energy and commodities Andrew Polydor, COO Ian Plunkett, and Chris Dearie, COO of data and analytics. Sinclair says that “phenomenal team” is what first attracted him to the role. 

“Similarly to TMX, the data business here is 6 percent of group revenue. I think there’s a huge opportunity to change that,” he says. 

One key area of focus is data on the over-the-counter (OTC) assets brokered by TP Icap, which is “extremely valuable” because of its scarcity.

Hailing from an exchange, where market data is highly regulated and commoditized, Sinclair sees great opportunity at TP Icap, which has a massive breadth and depth of OTC data. In fact, one plan for TP Icap is directly inspired by his TMX days, after the LSE merger collapsed, when TMX embarked on a joint venture with index provider FTSE, creating the FTSE TMX Global Debt Capital Markets fixed income index business in 2013. 

“The irony of it is that neither FTSE nor TMX were actually generating the content. We relied on the dealers for the content, which I think is a fantastic opportunity for TP Icap. Because we’re the world’s largest IDB, we’re the best source of OTC content. We’re going to be working very closely with partners who are in that space. There is a natural role for us there,” Sinclair says. 

He and his team have also identified opportunities arising from the revised Markets in Financial Information Directive (Mifid II), which went live January 3, 2018, and has resulted in TP Icap making pre-trade and post-trade data available for the first time. But this is a mere subset of the data that TP Icap plans to make available, Sinclair says, adding that the broker is excited about “other datasets that we have that we’re going to want to monetize and bring to market.”

TP Icap data COO Dearie calls the increase in pre-trade and post-trade data as a product “a significant change” from what the broker currently offers. 

“In the past, we’ve been very focused on what is pricing data, and how pricing data works. But if you start thinking about it from a venue perspective, you have volume metrics, you have liquidity indicators, you have different derived data that we can build off the back of the stuff that we’re adding to the platform,” he says, predicting that it will result in a richer and deeper dataset that the broker will be able to implement globally across a whole range of assets. This will continue to enhance TP Icap’s offerings within the market data and OTC data spaces, he adds. 

In other words, Mifid II generates vast quantities of data and enormous amounts of oversight and governance—a change that Dearie says the whole industry, including the regulators, are getting used to insofar as its impact from a data perspective. 

“I think it’s worth pointing out that under the acquisition, the two major brands will remain separate, so the broking brands of Icap and TP will continue to compete as they did prior to the acquisition of the Icap assets,” Dearie explains. “As a consequence of that, we will have datasets that reflect different liquidity pools that we’re offering.” 

Opening the Lines of Communication

Dearie says this is only part of the transitional story at TP Icap, which as a result of Mifid II, now operates 11 different venues, split between TP Icap and PVM, the oil brokerage business it acquired in 2014 that brokers OTC trades in swaps, forwards, and physical crude oil and refined products. 

“There will be elements of the data products that continue to reflect the different liquidity pools that we’re supporting from a group perspective in terms of transaction capability, and then on top of that, the next phase is the ability to bring some of those datasets together to look at aggregated liquidity and aggregated metrics across those venues,” Dearie says. 

Sinclair says this translates into an integration of data products, and of course, in this era of transformation for TP Icap, Sinclair has client service in mind. He no longer can use a pay phone to tap into the client experience, but the broker has opened the lines of communication, and “all of our product decisions will be client-driven,” he says. 

“We’d like to have a common platform so that our clients can gain access to both the Icap and Tullet Prebon data in the same vehicle, plus we also want to upgrade our capability to deliver cloud-based services that make it very easy for self-service clients to come and acquire products and services faster, in a far more client-centered way,” Sinclair says. 

True to his sales roots, he says it is not enough to add more content, but that the user experience must also improve at the same pace.