UPDATE: Interactive Brokers Taps Airex to Grow Trader Data Portal

Under the agreement, Interactive Brokers joins Airex's AMP (Airex Market Partner) program. Airex has built a co-branded version of its marketplace that is already live at interactivebrokers.airexmarket.com, and which in the coming weeks will be linked to the proprietary Investors' Marketplace content portal that the broker rolled out earlier this year.

Interactive Brokers provides access to more than 30 core content providers via its trader workstation, and more than twice that number via the Investors' Marketplace. However, the broker will increase the number of available products and sources significantly by linking to the range of applications, reports and information sources─collectively dubbed Financial Air─offered by Airex.

"Today, this is a complement to what Interactive Brokers is doing," says Airex chief executive Stephen Kuhn, adding that as the vendor increases the number of content partners available, "Over time, it will be orders of magnitude greater than what they offer today."

"Our main goal with the research, news and market data [offered via Investors' Marketplace] is to provide high-quality information and tools for clients," says John Schneider, special advisor on business expansion at Interactive Brokers. "A secondary goal is to achieve greater efficiency for us, plus the vendor management aspect and any revenue that comes out of the relationship."

Schneider says the broker chose to work with Airex because of the number of providers already available on─and still being added to─its platform, plus the fact that it simplifies the vendor management process of dealing with multiple providers.

"Managing 100 vendors, contracts and pricing can be very time-consuming," he says. "The point where we realized was this year, when we added 20 products to our trading platform and launched the Investors' Marketplace. We had been talking to Airex for about a year... but then we went into a deeper conversation about how they could manage more of the process than just providing content."

Kuhn says the vendor component of Airex's offering is an important feature for firms looking to offer a variety of content sources to clients, but who don't want the administration burden of managing those sources.

"These firms know their customers want data products, and they know that offering these will increase their trading volumes, customer interaction, and the stickiness of their site. So they want to provide other products, such as research and analytics, to their customer base, but they've discovered that vendor management is a monumental undertaking, and it makes no sense to manage that themselves. Having centralized vendor management makes this much more efficient, and we provide a turnkey centralized management infrastructure... with vendor management, reporting and analytics," he says. "You have all these firms managing vendor relations, spending perhaps $500 million per year on financial information products, and spending tens of millions of dollars per year managing hundreds of vendor relationships-and all of them managing the same relationships. It's a legacy problem of the industry's direct sales model. These firms don't want to be in vendor management.... They want to offload the long tail to us but keep the core relationships."

Kuhn says Interactive Brokers "instantly" grasped the value proposition of Airex's offering, and that the work to integrate Airex with Interactive Brokers' Investors' Marketplace took around 60 days─a timeframe that he says is "typical and falling," adding that "As the world becomes more aware of and accustomed to the AMP model, we are finding that these contracts become shorter and shorter."

Though Interactive Brokers' primary focus is on providing Airex's content to its clients, Schneider says opportunities may arise in future for the broker to use content from Airex's partners to meet its own internal data needs.

"Most of the Airex relationship is focused on clients. But being a large broker-dealer, we consume large amounts of data... and as their universe of vendors expands, there may be ones that could supplement or replace things that we're already doing," Schneider says.

Airex Preps Seamless Access

In addition to signing up more content providers to its marketplace and creating custom content portals for clients such as Interactive Brokers, Airex is also working on new initiatives that will allow both suppliers and end-users of data to start selling and consuming data and services via Airex.

Specifically, the vendor will roll out self-service portals for vendors and users, which will let more data providers sign up to distribute data and services via Airex with minimal involvement from the vendor, while also making it simpler for user firms to access third-party content on the platform by making its "turnkey" AMP partner portals completely self-provisioned.

"Later this year, we will offer a Vendor Portal that will allow any company to come to Airex and set up and account and start selling their content, and by the end of next year, we expect to have 1,000 vendors, providing access to potentially hundreds of millions of products," Kuhn says.

"As part of our AMP Program, we provide hosted, co-branded, turnkey markets to partners like Interactive Brokers to offer to their clients... and we are doing this with brokers, prime brokers, custodians, fund administrators, and banks─so sellers get access to millions, moving to tens of millions, of prospective customers," Kuhn says.

In fact, the vendor's current pipeline of potential AMP Partners represent more than 200 million prospective buyers "who are at best under-served" by the "legacy" fixed-cost direct sales model that makes it inefficient for vendors─or, for example, for banks looking to monetize sunk research costs─to sell to individual financial professionals or investors.

"Our existing AMP Partners represent seven figures [of potential end-users]. We already have 15 AMP Partners, and the others in our active pipeline represent more than 100 million individual prospective buyers," Kuhn says, adding that in the future, these partners will be able to "self-serve" their needs, and create branded Airex marketplaces and provision data from vendor sources "with no involvement from us at all."