Opening portals to research access
Access to information is one of the main gifts of the internet and firms are beginning to explore its range of possibilities as a medium in which to distribute and access research information. Several internet portals already exist that offer research aggregated from a number of sources, while a new portal is about to open that provides investment firms with a single access point to banks’ research and other services.
Boston-based First Call has been providing aggregated equities research since 1984 and now offers a range of information services, including broker-dealer morning meeting comments, real-time earnings estimates, a database of buy and sell recommendations and fixed income information services.
In February this year, First Call owner Thomson Financial announced that it is integrating First Call services with those of its recent acquisitions Datastream and I/B/E/S, which include historical market data and analytics. It has also recently added a wireless service whereby investors can get morning meeting comments and intra-day research notes, as well as earnings estimates and consensus buy and sell recommendations, all via a handheld computer.
New York-based Multex.com is a product of the internet era and provides not only a portal for the aggregation of investment information, but also offers its technologies to others. Its own service includes aggregated research, morning notes and earnings estimates, while it hosts proprietary online research services for firms such as Schroders, Merrill Lynch HSBC, Royal & SunAlliance Investments and Julius Baer Securities.
Among the advantages of a hosted online service are global access and greater efficiency in finding information, says Nicola Ralston, Schroders’ head of investment management. “Our analysts and fund managers are able to access and share research, market data, internal fundamental and recommendation data and internal discussion boards from anywhere in the world.” Another advantage of such services is the ability to track user access.
Like First Call, Multex.com has recently introduced a wireless service for dialling into information, this time via mobile phones as well as handheld computing devices. The wireless service includes research, estimates, quotes, news, fundamental information, as well as facilities for online collaboration through online chat and messaging.
But even the aggregated research services of First Call, Multex.com and others and the proprietary web sites of sell side firms appear not to have met all the needs of investors. Last year, a group of broker-dealers got together to discuss how they could meet a growing demand among their customers for a simpler method of accessing their research and other information services. The investor customers typically had arrangements with several broker-dealers but no longer wanted the hassle of managing separate connections to each. Their demand was for a single online venue where they could view basic market information from all of their providers, with seamless links through to the individual firms when they wanted to access more specialised proprietary services. What the broker-dealers come up with was TheMarkets.com – an internet portal that acts as a single gateway to investor information from nine leading firms.
The project’s initiators are all the usual suspects – Goldman Sachs, Merrill Lynch, Morgan Stanley Dean Witter, Salomon Smith Barney, Credit Suisse First Boston, Deutsche Bank, UBS Warburg, JP Morgan and Lehman Brothers. Their aim is not to replace existing services, they say, but to create a central site with a comprehensive capital markets database and straight-through connections to the individual firms’ proprietary content, which remains on their own sites.
To meet its aggressive schedule, the group needed an experienced technology supplier and hired Multex.com to build the site. Multex.com already had connections to four of the broker-dealers, but says the challenge was to create a common interface for all nine members, with security layers to maintain electronic walls between their proprietary information.
TheMarkets.com acts as a trusted third party, authenticating users and then enabling them, using just one password, to access the information on the site and to transparently connect through to the proprietary content of those firms with which they have arrangements. A feature of the site is that the common information is free, which has led to some questions as to whether the broker-dealers are attempting to compete with the traditional information distributors such as Reuters and Bloomberg. However, the firms deny this.
For the moment, TheMarkets.com plans to confine its coverage to equities information but may add equity derivatives and e-commerce services in the future. The group also plans to add more broker-dealer members, but only after it has gone live, which is planned for the second quarter of this year.
Meanwhile, First Call is planning to launch a similar service called BrokerLink, also within months. The company recognises that there is indeed a tension between the needs of investment firms and brokers in terms of research.
Given the burgeoning volumes of information becoming available, the buy side wants simplicity and efficiency and is looking to find research information all in one place, says Scott Rosen, senior vice president of research services at First Call.
Brokers have different problems. In an era when information is widely disseminated, brokers are finding it increasingly difficult to differentiate themselves in terms of their opinions, so they have taken to trying to make the presentation of their research distinctive, says Rosen. Also, many have gone to a great deal of effort to build proprietary web sites only to find a disappointing level of traffic. Hence the attraction of the portal idea which gives the buy side the one-stop access they want, but also channels their in-depth enquiries through to the brokers’ own web sites.
BrokerLink will provide links from First Call’s aggregated information through to individual brokers proprietary sites. First Call has far more broker members than just the top club which TheMarkets.com represents and could potentially offer many more straight-through linkages.
Recently, the focus has been on how the internet can change the nature
of trading, with hundreds of trading platforms coming online to great
However, the internet began as a mechanism to share information and it has already revolutionised the distribution of financial data. But developments are not over yet and the new research portals are another step along the way to broader access to investment information.