To have information, but to be unable to use it, is a frustration that many businesses experience. Freeing that information, and making it usable alongside other measures, can present real opportunities. Exchange operators and post-trade service providers face rapidly evolving business dynamics and competition. Seizing opportunities is therefore immensely important.
This paper describes the opportunity for market operators to see a fuller picture using the data they already hold.
Market participants are demanding consistency in symbology (naming convention) to minimise investor confusion, promote stability and mitigate operational risks. Internally they need to reduce the costs that stem from duplication of support for multiple vendor symbologies. Currently each exchange has its own data format and symbology, which means that each data feed must be normalised, renamed and consolidated before the data can actually be used. Through the use of symbology users navigate the data available on a specific instrument. Market data vendors provide their own conventions which allow users to cut across individual exchange symbologies but nevertheless are not compatible. Nirvana for trading firms has been a common symbology to ease navigation between market centres and data vendors, providing a better experience for investors whilst reducing back-office complexities. The market has for some time been crying out for a solution which allows them to integrate data from a myriad of sources seamlessly with trading applications, allowing new content to be added quickly whilst eliminating the difficulty in managing symbology changes and feed updates. As this paper will show, the best contender for a common symbology at present is the RIC.
Exchanges are in a bind. Established business lines are squeezed on margins and new revenues are hard to find. Regulators see on-exchange trading as the future and want over-the-counter (OTC) trading to be limited. They also support infrastructure being made as resilient as possible, and to that extent they are supporting market operators, propping up exchange operators who are being squashed between ever decreasing numbers of alternative revenue streams and ever tighter margins as customers push them on price.