Let the consolidation continue. Not only did WatersTechnology break the news (pats self on the back) that Ion Group is acquiring Dash Financial (which I’ll write about in just a bit), but buy-side-analytics specialists MackeyRMS and InsiderScore have merged, and Tradeweb bought eSpeed from Nasdaq.

It will all depend on how efficiently the nations of the world get the pandemic under control in 2021 (please let it be 2021), but as jabs go into arms, hopefully, some semblance of normalcy will return, and normalcy in the world of fintech also means consolidation. By the way, I only learned in December that Brits call vaccination shots “jabs”…y’all crazy. A jab is a punch that Anthony Joshua throws—how y’all gonna also equate a jab to a doctor stabbing my 90-year-old granny with a needle?

Also by the way, my grannies are long gone, but I thought the word “granny” was comedically funny. Let’s get to it.

Ion makes another acquisition

Before I get into Ion acquiring Dash, let me brag for just a minute. First, we broke the news that Ion acquired Dash from private equity firm Flexpoint Ford. Second, I happen to know that the Wall Street Journal was close to reporting the news, but we landed the jab first. Third, as I was saying last week, we often break news, but for us what’s more important is that we provide the analysis around the news. So if someone beats us to the punch, that’s fine, because we’ll write the definitive piece (we hope) around that nugget of news. And fourth, as a subscriber of WatersTechnology, you’re privy to news that non-subscribers won’t hear about for a long time because most every other media outlet that covers the world of fintech is not a subscriber to WT—and no one has followed our coverage of Ion-Dash. Don’t worry, once this deal closes in Q2 and a press release is put out, I’m sure the trade media will finally write about it. (Yes, I’m salty.) 

OK, enough navel-gazing—let’s get to the analysis.

Ion acquired a firm! SHOCKER! Next, you’re gonna tell me that SS&C Technologies has acquired a tech company. Mind blown.

But there are a few reasons to take interest in this deal. First, Ion is looking to build up its M&A war chest, and there are likely other deals in the trading technology space to come from the Irish company in the near future. In December, Ion sponsored a $500 million listing of a special purpose acquisition company with the US Securities and Exchange Commission to help fuel further acquisitions. Now, I could sit here and write that I know what that means…but I do not. Fortunately, I have reporters on staff that can explain what a “SPAC” is, but since they’re not writing this column, we’ll just press forward with the understanding that Ion is looking to make more deals.

Secondly, though, is that Dash, which specializes in options execution technology, fits nicely (according to sources) with another piece that Ion acquired a while back—Fidessa. Now, as we’ve reported, the Fidessa addition hasn’t exactly been seamless. But as Ion looks to strengthen its position on the sell side, this deal makes sense.

One source: “Ion is typically in fixed income, so this will complement Fidessa. It looks like Ion wants to own the sell-side technology space.”

A second source: “That gives them a strong proposition in low touch/algo trading in the US, which was the weak spot of Fidessa.”

As we noted in the Ion-Dash article, we followed up on our original deep-dive into the Fidessa workforce exodus by reporting that, according to two sources who were employed at Fidessa this past summer, one of whom was since made redundant, Fidessa has seen further layoffs. Of course, Fidessa was far from alone in making cuts during the pandemic…so read into that what you will.

Still, as Ion integrates Dash—and, again, the deal is expected to close in Q2, but nothing is finalized—industry observers will look at how Dash’s staff reacts to being part of the Ion Empire.

Dash has seen solid stability in its senior ranks. Many of the company’s senior executives—and the company is basically 10 years old—have been there for six years or more. (I’m going to put the names in bold just for emphasis in case you only care about the person and not the title.)

Of course, there are cofounders Peter Maragos and David Karat, but there’s also Angelo Maragos, chief product officer; Artem Shum, CTO; Daniel Curley, head of business development; Evan Tindall, head of business intelligence; Stino Milito and Tim Miller, the company’s co-chief operating officers; Tommy Martin, head of sales strategy & operations. Oksana Gandzii, head of routing, who helped build Dash’s smart order router back in 2011 while at B2Bits (and later EPAM Systems), joined Dash in 2016. Shum was also originally at B2Bits.

Still others joined after acquisitions and stayed on, including managing directors David Cross, David Dooman, and Eugene Kearns, who came on after the LiquidPoint acquisition; and Collin Carrico, president of Dash Prime, and Ben Schwartz, chief strategy officer of Dash Prime, who joined from ERoom Securities.

Meanwhile, the company poached a handful of employees from Bloomberg, including Steven Bonanno, chief technology officer; Glenn Lesko, chief growth officer; and Jennifer Hubbs, managing director of portfolio trading.

There are many metrics that can help prove the worth of an acquisition, but if staff from the acquired business stay on and buy into the acquirer’s philosophy, I think that kind of stability is respected by users. (Fee increases and product reliability being the other big factors in client satisfaction.) As noted in that article I’ve already linked to a couple of times, several users of Fidessa’s OMS expressed worry to WatersTechnology. Additionally, users of Broadway Technology have expressed concerns about that vendor getting acquired by Ion. These are the same concerns raised by commodities traders. And as we reported in late 2019, a group of European and UK banks is considering building its own fixed income trading software in a move that would allow the institutions to cut ties with Ion.

Mergers and acquisitions eventually boil down to a people problem. They can be good because it allows for something of a rebirth, where new ideas are seeded and underperformers are weeded out. They can be bad because the camaraderie that made a company successful is stifled, and attrition results in innovation stagnation. Ion’s M&A track record is likely to make clients of Dash at least take notice.

Finally, it’s also important to note that I’m not picking on Ion. This is some unsolicited advice, but the company has not done itself any favors on the PR front. The vendor’s executives, led by CEO Andrea Pignataro, are not fans of talking to the media. Fair enough. It’s my opinion, though, that that strategy can work for a secretive hedge fund, but it’s a more challenging gambit for a tech company that has thousands of employees and clients, all of whom have individuals that have opinions.

And these are just my opinions, but I don’t think that Ion is some Raider Acquirer the way that some private equity firms like to acquire companies and strip them down for parts. There’s a strategy here—they’re just not very good at articulating the strategy. And while the company’s executives absolutely do NOT need to talk to media outlets—much less WatersTechnology—users of their acquired toys DO have concerns and want to let others know what those concerns are. I’m not saying that Ion’s execs should talk to WatersTechnology—though, we are always willing to talk—but they should maybe reconsider their strategy as to how they’re presenting themselves to the world.

Or, maybe Ion’s clients are thrilled and media outlets like WatersTechnology are only talking to the malcontents. I guess time will tell.

Data for sale

The Ion-Dash deal is a hardcore technology platform acquisition, so let’s switch it up a bit and focus on data. Max Bowie—the man, the myth, the market data legend—wrote a very long feature about how some interdealer brokers (especially those in the OTC space) are looking to monetize the data that’s generated from their broking operations.

While the idea itself makes complete sense, there are challenges involved. These companies need to establish “data organizations” to productize and sell the data—no small task, just ask any pure-play data provider. They also need to develop policies to govern the usage of their data. To do this, brokers are following the data licensing models long-established by exchanges, which can include the use of aggressive audits. Audits, of course, are a necessary evil as they scrutinize a client’s data usage for any evidence of use beyond the strict terms of their contract, but they can be time-consuming and operationally burdensome for clients. The end result can be a deteriorated relationship between data provider and user.

As Max’s tome explains, industry participants are worried about increased fees and audits should IDBs follow exchanges down this data monetization path. But the simple fact is that as firms realize that data is God, there’s gold to be found in them there hills. And brokers are not alone in trying to figuring out new ways to monetize their exhaust data, which is what we call the data that’s generated over the course of these companies doing their main function.

Exchanges not only created the structure for data monetization and audits, but they, too, are looking at how to generate revenue from new datasets. The Australian Securities Exchange, for example, has DataSphere. The data science platform is trying to figure out new ways to capture and monetize more of the data it creates, David Raper, executive general manager for ASX’s trading services, told Wei-Shen Wong a little while back.

“ASX makes a lot of data available today, so when you see the news that BHP Group has been up three percent, for example, that’s from ASX data. But there’s a lot of other data that is generated within the organization that has never been surfaced.”

Shen also wrote about how the Hong Kong Exchange and Clearing Limited is still in the strategizing phase of an ambitious project where the exchange would help firms to more efficiently organize and develop the data they create through the exchange.

And then, as I’ve written about previously, there are the companies that are looking to help others to monetize their data. RavenPack is building a service that scours through a customer’s internal data, looking for unused, alpha-yielding datasets, rather than chasing only external, third-party datasets. They can then use this information for their own internal uses, or maybe that information can be packaged and sold to others.

Meanwhile, Canadian data technology provider TickSmith and UK-based alternative data advisory firm Alqami have partnered to help creators of alternative data monetize their content directly to financial services firms. What TickSmith and Alqami are doing is to take data that exists that is created by companies that would be classified as vendors, but who don’t yet target that at the financial sector, and don’t structure the data in a way that would be useful for trading companies. Alqami identifies companies with potentially useful data, assesses its value and advises them on how to commercialize it. TickSmith provides the technical tools to take it from that stage to something that can be easily sold to and consumed by financial firms.

And, of course, banks—and since I know y’all love reading about Goldman Sachs…here ya go—are trying to figure out new and inventive ways to monetize their internal data. Asset managers are, too. When I started at WatersTechnology more than a decade ago, banks and asset managers went out of their way to say that they are NOT tech companies. Today, they love to talk about their tech capabilities.

Well, this is true of both end users and technology providers, but my prediction is that within five years there will come a shift when every firm will present themselves as a “data provider”, just the same way that Bloomberg, Refinitiv, and MSCI are data providers. Some of it will be BS marketing, but the savvy ones are today trying to figure out how to make that idea a reality.

I’m sure that there are similar projects that exist in the marketplace as the ones I’ve mentioned that I’m either forgetting or that I don’t yet know about. Please, don’t hesitate to reach out and let me know about what I’m missing: anthony.malakian@infopro-digital.com.

The image at the top of the page is Alfred Stieglitz’s “Georgia O’Keeffe—Hands and Thimble” courtesy of the Art Institute of Chicago.