After 20 years in the data business, Marion Leslie of Thomson Reuters says that the big change in recent times is that costs associated with data collection and management are now being turned into an asset. Thank you ‘big data’.
Leslie, the managing director of Thomson Reuters’ global pricing and reference services business, said on a recent trip to Australia from the UK that regulatory pressure since the global financial crisis had driven a change in mindset with respect to data about what was important.
“When you get regulatory pressure to aggregate risk across a firm and they find out they can’t do it, it focuses their attention,” she said. “Everyone needs more data and they need it quicker and better collated.”
And one of the big advantages that Thomson Reuters has over others is that this data is pre-trade. What that means to many is that this information allows you to stop making a mistake. In the ‘old world’ of custodian compliance it is post trade compliance. In that world you discover the mistake after it has been made and most unravel it.
Patrick Liddy, of MSI Group, says: “It is simply post-trade compliance versus pre-trade compliance. And as every one knows, prevention is better than cure.”
And that’s a tremendous bit of leverage that Thomson Reuters can give funds – stopping compliance problems before they happen, he says.
Leslie says that when financial services firms are new they can build vendor-agnostic modern infrastructure to handle information but bigger older firms are stuck with legacy systems that are expensive to replace.
“And no-one’s got any money because returns are low,” she adds, exaggerating a little to make her point. Her clients for pricing and cross-asset reference data include the world’s largest banks, insurance companies and fund managers.
In prior roles Leslie has run global technology and content teams at Thomson Reuters. Most recently, she was the global head of instrument and pricing content, creating content for the equity, fixed income, commodities and energy, foreign exchange and money markets, supported by a team of about 1,500 people in 26 countries.
She also spent nearly four years in India, creating a startup business in Bangalore, building the Thomson Reuters office to one of 2,000 employees across multiple functions.
“We talk to anyone and everyone who consumes and uses data,” Leslie says. “There are some who outsource [their backoffice] but still want to own the data too.”
In Europe, the recently introduced Insolvency II regulations for insurers, requiring a new level of understanding of the aggregated risk to their business, has meant that they suddenly realised they could not always get all the data they need from their various providers.
But the upside with these sorts of regulations is that custodians, fund managers and banks have realised that they can take advantage of their new data collection and aggregation to also add value to their businesses in other ways.
“In the Basle III directive, there is a little section on how to handle data,” Leslie says. “Who would have thought there would be a regulation for that? But it’s actually very good.”
She says that clients are saying “now I have all this information I can use it to be proactive in other areas, such as to reduce costs”.
Thomson Reuters has about 5,000 “data people” around the world and has been through its own modernisation journey, buying various content companies around the world and integrating them into its own systems.
“For me it’s all about the content,” Leslie says. “The product is just the delivery mechanism. Clients need to ask themselves what they are trying to achieve. We’re an information company with great content.”
* Greg Bright is publisher of Investor Strategy News (Australia)