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MiFID Brings New Trading, Data Management Opportunities
January 1, 2007
Project Boat aims to reduce the cost of managing data, as participants can save on trade reporting fees and share IT costs in addition to selling their own data dissemination and reporting capabilities. Second- and third-tier players may not be able to handle their own data management responsibilities under MiFID, which some analysts have estimated could cost upward of EUR200,000 ($262,000) annually. Whatever route investment firms take in response to MiFID, the data challenge is at the heart of it all, they say.
Project Boat targets LSE in particular, because in the U.K., market participants must report over-the-counter trades to the exchange, which collects fees for trading reporting and generates further revenues by collating and selling the same data back to its members and information vendors they use. LSE does not break out its fee income from data services, but analysts have cited figures of GBP10 million ($19.3 million) annually from trade reporting alone.
Members of the Project Boat consortium have declined to be interviewed and disclosed little about how the platform will work or who is providing the underlying technology for handling 4,000 to 5,000 trades a second, according to knowledgeable sources. Contenders likely include Telekurs, Reuters, Bloomberg and Thomson Financial. Members of a separate initiative under the real-time market data subcommittee of the MiFID joint working group, which has just released a final model for pre- and post-trade data dissemination, define Project Boat as a data aggregator.
"The real-time data group has recommended that firms send their pre- and post-trade reports to intermediaries known as data aggregators, which will in turn pass along that information to data distributors such as information vendors," said Richard Gissing, president of Gissing Software in Kent, U.K. "It is unlikely that systematic internalizers will take on the role of data aggregators, but exchanges and consortia such as Project Boat could do so."
Gissing Software and Arcontech are in discussions with members of Project Boat to provide links to each other and to data distributors. "There will be a lot of opportunity to create a more level playing field and bring an end to market data being available from only one source," says Arcontech's Miller.