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Last month, WatersTechnology looked into Cusip Global Services’ licensing agreements with third-party providers after some broker-dealers received letters from FactSet (which now owns CGS) that it would turn off access to Cusips. Also, WatersTechnology examined upstart exchange IEX’s shuttering of its loss-making IEX Cloud. Let’s get to it.
As legal letters fly, Cusip licensing debate rolls on
WatersTechnology learned that FactSet, which now owns Cusip Global Services, issued letters to some broker-dealers threatening to turn off access to Cusips—nine-digit alphanumeric codes that uniquely identify nearly all North American stocks and bonds.
In a letter to a US broker-dealer seen by WatersTechnology, FactSet demanded that it sign a license agreement with CGS to keep its access to Cusip data, despite the firm not receiving any data directly from CGS but through other third-party data providers.
IEX Cloud closure forces fintech clients to seek data alternatives
New York-based upstart exchange IEX is preparing to shut its loss-making IEX Cloud data marketplace and development environment at the end of August. This presents an opportunity for other data providers trying to lure IEX’s clients to their products and services.
While IEX Cloud’s “prosumer”-focused model attracted retail investors, developers, and startups, IEX Cloud struggled to attract larger-value institutional clients. The business had been running at a loss since its inception. As a result, on May 31, IEX gave clients three months’ notice that it would shut down IEX Cloud and retire all IEX Cloud products on August 31, 2024.
“Any business needs to break even at some point, and it’s hard to break even if customers expect data for free. Every vendor has large expenses every month—storage, the cost of data—so it’s a constant challenge of how you price your services: what model you employ, and how you structure support for a large number of low-value customers.”
– Christina Qi, Databento.
Octaura preps for CLO trading launch
In April 2021, WatersTechnology first reported that a consortium of banks led by Citi and Bank of America was preparing to combine its members’ collateralized loan obligation (CLO) trading efforts into a new multi-bank trading platform, named Project Octopus at the time. The following year, those efforts were formally introduced as a new company called Octaura, with Biran Bejile as CEO.
Fast forward to April this year, the trading platform went live with loan trading. Later this year, Octaura will launch CLOs as its second asset class. The platform is currently in beta with CLO trading with several sell-side and buy-side participants.
“My view about all of this stuff—particularly data or tech in general—is that the best technology is one where we don’t talk about the technology; we talk about the impact of the technology.”
– Brian Bejile, Octaura.
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Zeros and ones: Industry contemplates T+0 as the next step
As the North American transition to T+1 settlement is now well out of the way, some market participants say same-day settlement could be the next goal. But across capital markets, sources have told WatersTechnology that they do not see a transition to T+0 happening for at least five to seven years.
For some, defining what T+0 entails is an important part of the roadmap. Others say the need for a tech overhaul wouldn’t necessarily mirror past transitions.
“People are going to burn out, so there needs to be some redress and some technological change, to support some of the stuff that’s going on. And it hasn’t been done yet. People just didn’t have enough time to address some of their batch-based and manual processes. We might see a lot of work going on over the next year or so, especially if we see more conversations about T+0.”
– Virginie O’Shea, Firebrand Research.
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