Category Archives: Blotter
Hedge funds and institutional traders may no longer have the option of paying a premium to Nasdaq for access to an API that includes consolidated real-time market data pertaining to major US exchanges.
The Nasdaq Securities Information Processor (SIP) has been in the cross hairs of government regulators and anyone impacted by a three-hour Nasdaq outage caused by the SIP last year on August 22nd. “Events vastly exceeded the SIP’s planned capacity, which caused its failure and then revealed a latent flaw in the SIP’s software code,” the Nasdaq report said.
When was the last time you told one of your clients “a software flaw” caused the primary and backup system outage?
By quickly responding to market data movement, traders use the Nasdaq SIP to beat others to the punch. These electronic traders also use the mass of information to predict future stock price movements and adjust their trading algorithms accordingly.
Nasdaq has decided they no longer want to support the SIP for consolidated quote and trade data for stocks, unless major resources can be found for upgrading the legacy ITCH protocol feed and Windows 2003 operating system. Although revenue from the SIPs was $400 million for 2013, the risks are too high, said the report.
The winner will be NYSE Euronext which runs two SIPs on behalf of the nation’s exchanges, albeit at a premium and with the superior infrastructure to justify the higher cost to traders.
The loser will be the small traders, where consolidation could mean a virtual monopoly for NYSE Euronext. At a time when regulators want more transparency spread across more participants, one could guess that there will be a cash infusion to rejuvenate the retiring Nasdaq SIP. Nasdaq says they are open to any and all “suggestions,” or what sounds like a stipulation that someone else needs to chip the money for an upgrade.
The cancellation of the Nasdaq market data service is not scheduled to take effect until 2016.
When was the last time you “Yahooed” a restaurant? Howabout “Binging” someone to learn more about them? Maybe, never. Google’s search engine monopoly corners online advertising so that there is a lack of competition from other companies. Characterized by Google’s singular power to control where customers turn, their monopoly provides the ability to charge what they want, when they want to. The European Union agrees Google needs to stop hogging the market, and they issued a list of Google’s monopolistic practices following a two-year probe:
Google hogs specialized search – Google prominently displays links to its own specialized search services within its web search results and does not inform users of this favorable treatment.
Google hogs content usage – Google uses without consent content from competing specialized search services in its own offerings. Google thereby benefits from the investments of competitors, sometimes against their explicit will.
Google hogs with exclusivity agreements with publishers – Google requires web site owners to display no or only a limited amount of online search advertisements from Google’s competitors, which reduces the choice of online search advertisements they can offer to users of their web sites.
Google hogs by creating contractual restrictions on the portability of Google’s AdWords – Google contractually restricts the possibility to transfer online search advertising campaigns away
Bing accounts for 17.9 percent of search share in the US but they may be gaining ground on Google. Without irony, Microsoft’s CEO recently called on the US Government to break up Google’s monopoly on search engines. Nevermind their long battle with the federal government over their own past monopolies.
Governments won’t likely be successful in breaking up the mega-company that is Google, precisely because there is nobody doing as good as job. We Google because no service has proven better at search results. Nonetheless, calling a monopoly out doesn’t meant it should be broken up. In fact, the break up will occur through the natural shift in user preferences and methods for accessing search results. There will be new entrants coming into the market attempting to disrupt Google’s corner on advertising and searching. The introduction of mobile technology and new gaming systems, for example, demonstrate the move away from Google already. Bing is featured as the default search engine on the Xbox 360. Geographically Google is, arguably, a lost leader in Asian markets already. Understanding that Google does not monopolize all countries should be an indication of how other models are evolving market standards.
Users on Elance and oDesk have voiced strong disapproval following the merger announcement. “Even after you merge, please don’t go cheap, don’t turn our Elance into odesk with it’s $5 projects and $1 rates. Let us continue earning our $$$$$$s,” begged Konstrantin Sharipov on the Elance Facebook page. While the companies are quick to insist that the platforms will continue to operate separately, the vitriol on Elance’s Facebook page should be enough to remind the executives that their savvy business deal has practical complexities that make true integration nearly impossible. Similar to Mac users versus PC users, Coke versus Pepsi and Chrome versus Firefox, the two platforms vie for clients by offering feature sets that are entirely different but subtly the same. Chris Fernandes commented “oDesk is like working at the MacDonalds of Freelancing.” Denise Casas commented on the oDesk Facebook page that the “oDesk interface is way better! Please continue to keep it simple and FREE for freelancers.” Most agree that oDesk excels at hosting low-cost labor contracts while Elance brings higher paying jobs. A minimum wage on Elance helps to enforce the difference.
While the specifics of the merger were not disclosed, our recent outsourcing portal expose dug up enough details on the two companies to speculate that Elance initiated the consolidation and will keep the upper hand. Gary Swart, chief executive of oDesk, was deferential following the announcement: “We don’t have to merge. We chose to.” The post-merger managerial structure puts Fabio Rosati, Chief of Elance, ahead of Mr. Swart who will be relegated to a “Strategic Adviser” – code word for being shown the door.
Despite Elance’s leverage, oDesk seems to have the market share in the volume of users and contracts. As the two companies await regulatory approval, oDesk outperforms Elance by an estimated $200 million per year in revenues. But executives at Elance in Mountain View, California have been more profitably in raising venture capital and maintaining customer loyalty – they’re estimated to have raised nearly $40 million more than oDesk last year. The company is also significantly older than oDesk which implies a more loyal customer base.
Nonetheless, consolidation of operations is why this merger makes sense. Their wait-and-see attitude will prevent significant changes to user experience for the time being. Time will tell how the two platforms leverage features across the isle.
“We have two very distinct platforms, each of which has value to its specific user base … so, in our case, we’re not focused on the traditional synergies two mature businesses might have, we’re trying to approach [the deal] in a unique way.” – Statement from Elance CEO Fabio Rosati
In the meantime, the Facebook fear mongers are united on one point that has historically occurred following mergers of this nature: everyone’s fees will increase when the competition is eliminated.
The below email came from Gary Swart following the merger announcement, its vapid content revealing nothing of how users will benefit from the merger, except to say there’s going to be “Significant technology investments” and “higher quality results”.