Security Pacific Market Information To Close Up Shop; RMJ Sale Cited As Reason For Failure

Security Pacific Market Information will cease to be at the end of July. Less than two years after its launch, the PC-based fixed-income data service has fallen victim to slow growth -- and to apparent boredom on the part of Security Pacific Corp., one of its parents.

At its demise, SPMI has about 400 subscribers and is thought to be losing money at an annual pre-tax rate of about $1.7 million. "It wasn't meeting our financial objectives," says SPC spokesperson Randall Brelsford. Competing with Telerate proved to be too tough, he says. "More than anything, the markets move off the Cantor Fitzgerald pages." Needless to say, for giant SPC, the closing is "absolutely immaterial to the corporation, and there is no impact on earnings."

Brelsford denies that SPMI's failure was tied to Security Pacific's sale last year of RMJ Securities, its government treasuries broker, but sources suggest otherwise. "The potential access to quotes from RMJ was considered a key part of the strategy," says one source close to the operation. It was thought that only inside prices from RMJ would let SPMI compete effectively with Telerate's inside prices from Cantor Fitzgerald. SPC's sale of RMJ was a major step in its plan to become a primary dealer in treasuries, a corporate priority that apparently outweighed the needs of SPMI.

SPMI's other partner, Market Information, Inc., was less eager to bow out. "Had the right partner stepped up, we would have continued our involvement," says MII president Bob Richards. But MII "didn't feel that it would be in its best interests to stay in the market by itself, because it felt it needed the alliance with a major player in the financial markets to have credibility."

Richards declines to comment on who might have taken over Security Pacific's role, but one source says Citicorp came very close, apparently with an eye on eventually merging the operation with Quotron. This appears to cast a new light on Telerate's warning in late March that Quotron's contract with Telerate prohibits it from offering anyone else's money market data until 1989.

Ultimately, SPMI's shift in emphasis toward mortgage-backed securities would have paid off, Richards says. "If you're going to compete, I think it's very important not to go head to head against Telerate," he says. Instead, find "a market niche that flanks Telerate or provides a service that Telerate isn't really attempting to provide well."

Telerate, meanwhile, won the bidding to get first crack at converting SPMI's customer base.