Sweden's Banks And Brokers Support Creation Of An Alternative To Reuters

Sweden's central bank and a group of Swedish securities dealers have established a financial information supplier to collect and distribute Swedish money market information in competition with Reuters Holdings PLC. The Riksbank and the Swedish Securities Dealers Association are attempting to seize control of their data through Peningmarknodsinformation or PMI. Many of the major players in Swedish money markets are dissatisfied with Reuters' control of the collection and distribution of their data.

PMI is building a real-time network to collect and distribute money market data to Sweden's major banks and brokers. PMI's lead contractor is Digital Equipment Corp., which, coincidentally, supplies much of the processing and communications infrastructure for Reuters.

Should PMI succeed in supplanting Reuters among its member firms, other industry groups may be emboldened to follow suit. For Reuters, the strategic implications of widespread contributor-owned competition are nearly as troublesome as the prospect of fixed exchange rates.

PMI is soliciting other vendors to distribute its money market data feed beyond the ranks of its membership, but the response has been lukewarm. As of last week, PMI said it had signed up only a handful of distributors to carry the service when it starts in September.

The Stockholm Stock Exchange and three unidentified Swedish banks have agreed to distribute the service, according to PMI president Nils-Robert Persson. The Stockholm exchange will carry the PMI service on its Stockholm Information Exchange (SIX) network. PMI is scheduled to make an announcement March 6 updating the distributorship situation.

As many as 12 vendors may carry the PMI service when it becomes operational, according to Per Ola Jannson, managing director of the Swedish Securities Dealers' Association.

But he denies the organization is disappointed with the initial response. "We believe there will be more vendors showing interest in the future," he says. Bridge Information Systems has already expressed an interest. In addition, the Stockholm Stock Exchange alone will give 2,500 institutions access to the PMI service.

Persson says the need for the system grew out of dissatisfaction with the current arrangement in the Swedish market. Players in Sweden currently rely on Reuters for their money market data, he says. But there is a growing feeling that they should own the data and the system for disseminating it.

Reuters, meanwhile, says its services to the Swedish money market industry by no means constitute a monopoly, pointing to services supplied by rival Telerate Inc.. While he couldn't provide subscription figures for Reuters' money market coverage delivered via its Reuter Monitor feed in Sweden, a Reuters spokesman says the service is "widely used." He adds: "We haven't been aware of any customer dissatisfaction [with the service] in terms of cancellations." He wouldn't say whether Reuters itself would eventually carry the PMI service.

PMI is working with DEC to create the real-time digital data network that will supply its shareholders -- Sweden's major banks and stockbrokers -- with money market prices and news. The service will reach additional screens through independent information vendors that integrate the PMI feed into their own products.

According to Persson, the network will be based on a cluster of three DEC VAX 6210s, which will feed updates of prices and news at a rate of 9.6 kilobits/sec. to MicroVAX 2000 microcomputers installed at members' offices. The feed will update a database resident in each MicroVAX. The historical price database will cover the period from 1982.

DEC will be providing all hardware and software under a flat fee agreement struck last July, Persson says.

The system doesn't feature a trading facility, but its open interface will allow member firms to build on additional functionality, DEC willing.

Price updates will be generated by the members themselves and entered via the MicroVAXes. PMI intends to bring in news services from outside vendors such as AP-Dow Jones.

PMI will distribute the service only among its members, but the participation of outside information carriers means that the service is likely to be available to interested parties outside Sweden. PMI currently has 40 members signed up to receive the service when it starts in September. Jannson says the project has stirred a lot of interest, much of that coming from abroad. When the idea was first raised, only seven players and the Riksbank were involved.