To borrow a phrase from sports commentator Dan Le Batard, the news on Wall Street this week was “intergalactically stupid”. But before we get into GameStop and Robinhood and hedge funds and Elon Musk and people with Reddit handles like PoopyButthole6969, first, a programming note. (Please skip ahead to the ESG section below if you don’t care about the ins and outs of journalism and our broader strategy.)

If you’re reading this, there’s a good chance you’re a subscriber or a trialist, and as far as I’m concerned, I answer to you, the reader, and no one else. (My bosses might disagree, but after 11 years, they largely indulge my delusions of grandeur.) So I feel that I owe an explanation to you for our relatively low output these last few weeks. As I’m prone to do, let me meander for a moment.

When I was named editor-in-chief about 20 months ago, I wanted to shift the focus of our coverage. It’s not that what we were doing was bad—quite the contrary; I believe we were already the best in the business within our small universe of capital markets tech coverage when I took over. But as more publications turn to a subscription-based model, it’s not so much about the number of stories produced, but the quality. You need to justify that subscription price tag (and ours is…hefty), and you need to do that with exclusivity and depth.

A couple years ago, if you logged into the WT website, you’d find an assortment of stories. Many of those stories were based on press-released information, but with added context and information gleaned from interviewing the subjects of those press releases. It was solid content, but it wasn’t exactly exclusive as the gist of the story was already public domain, and there were other outlets doing something similar.

So halfway through 2019, we looked to make sure that 95% of our coverage was truly-exclusive content. For the 5% of stories that were based on publicly released information (i.e., mergers, new regulations, massive announcements), if we were going to write about it, we would go deeper than anybody else. For example, while we might not break the news that S&P Global was acquiring IHS Markit, we’ll provide more information around that announcement than any other publication in the B2B world, and even among mainstream outlets like the Wall Street Journal, Financial Times, or Business Insider. We don’t always succeed in this endeavor, but I think we’re doing a solid job. (Please let me know if you disagree.)

This year, I want us to build on that foundation. If I’m being honest, we’ve published a fair number of zero-calorie stories in our history. What do I mean by that? Well, we would publish a story about XYZ Company upgrading one of its products. It wasn’t press released information—it was exclusive news, by definition—but did it really provide value to you, the market data specialist, or platform engineer, or chief technology officer, or SVP of product development or sales rep? It was a low-calorie snack. It’s not that project wasn’t important, but we weren’t doing a good job of explaining why it’s important and how it compares to what other companies are developing.

Essentially, we weren’t always taking that extra step. I want that to end this year.

It will take some time. We won’t always be successful in explaining the why and who else pieces, but that’s our North Star going forward. What that means is that sometimes we might have a story that can be published, but we need more time to answer those broader—hopefully, more important—questions. We need to explain why this news event matters to you, the data or tech specialist.

As a result, our output has gone down, but I like to think that the quality of the stories has gone up. And we will keep on improving the quality, but we’re also quite cognizant that you want more information. We will deliver on both ends—I promise—but there might be some weeks we stumble as we embed this evolving strategy into our own workflow. Please have patience, and if you have an issue with our coverage, remember I work for you—just send me a line: anthony.malakian@infopro-digital.com.

Ok, let’s get to those actual tech and data issues.

The Changing Face of ESG

When Joe Biden took the reins as president on January 20^th, he almost immediately signed an executive action rejoining the US in the Paris Agreement on climate change, overturning a Donald Trump executive action. It set the foundation for a key pillar of the Biden presidency: climate and sustainability.

The Paris Agreement is ambitious (though maybe not ambitious enough?), but it’s also largely toothless. Don’t get me wrong, even as a conservative, I support our involvement in it so as to have a seat at the table and, crucially, a guiding voice. How dare the nations of the world try and do anything without America’s leadership…blasphemy!

No, what I think will have a larger effect is BlackRock’s CEO Larry Fink flexing his green muscles, as Bloomberg put it here, on pushing companies to take climate issues more seriously. The Government Pension Investment Fund (GPIF) in Japan is also taking a lead in this area. If more influential asset managers and pension funds put their weight behind sustainability, combined with how Biden and other political leaders are aligning their nations, real, long-lasting change can happen.

But while BlackRock can advocate for climate-related issues, it’s the asset manager’s investment that most people care about. And it’s here where what we write about comes into play—data.

Our Mariella Reason recently spoke with Mary-Catherine Lader, head of Aladdin Sustainability at BlackRock. Lader explains that while it’s encouraging to see environmental issues taking on greater importance in the world of finance, the data that fuels ESG investing needs to improve.

One thing that jumped out to me was this: She says that the industry actually has plenty of ESG data; rather, it’s a matter of complexity. “There isn’t a shortage of data—it’s not about the volume of data—it’s that it’s hard to know what’s useful,” she told Mariella.

The data is inconsistent, unstructured, and there are vast gaps. But the biggest issue is that the data only provides a point-in-time snapshot. As a result, BlackRock is dumping its considerable resources into building models that provide predictive analytics.

“We’re going to see sustainability data transition from being a point-in-time snapshot, to more predictive and forward-looking,” she said. “Today, we have a few facts about a company; in the future, we expect that you’ll have lots more unstructured data at your fingertips that an investor can use a software tool to predict—to model—how a company’s performance in a certain area might change over time.”

So the question to be answered is, where can the Biden agenda intersect with this need for information that can help investors see more clearly into the future? (No offense to the fine folks at the Commodity Futures Trading Commission and Securities and Exchange Commission, but for all their talk about caring about ESG, it rings hollow without actual initiative, so this will have to come from the White House.)

I honestly believe this to be a hand-in-glove situation: if governmental and regulatory agencies around the globe can help institutional investors better direct their funds, there’s a tack-on effect where companies will have to improve their corporate structures so as to attract those all-necessary inflows. The more companies that truly buy-in to the green economy will help to create new jobs and grants for further experimentation and scientific exploration.

The Paris Agreement is a nice idea, but if capitalism helped get the Earth into this mess, I also believe that it can help get us out of it. Or, maybe I’ve had a few too many pints of Guinness. Feel free to tell me about how naïve I am: anthony.malakian@infopro-digital.com.

Quick Hit on Interop

I’ve been banging on about interoperability a bit too much lately (evidence can be found here and here), so I’m not going to get into it today. With that said, let me divert your attention to this story by Josephine Gallagher, where she looks at how State Street and SimCorp are partnering to address some coverage needs in the insurance space.

The agreement states that both firms will fully integrate and co-invest in their technology and outsourcing services for the insurance community (and that could potentially extend toward other buy-side functions in the cap markets space). The common denominator that has made this alliance possible is their shift to open technology—a shift that is necessary for vendors to remain relevant, State Street’s Jörg Ambrosius told Jo.

“We don’t believe that closed systems will—I wouldn’t say ‘survive’—but that it will be the right way to capture the market in the long term. When you look at history, closed systems have sometimes had to have a significant ramp-up and there is a tipping point where closed systems will eventually go out of fashion and will not be up to date anymore.”

When we talk about interoperability, there are a few avenues companies go down. There’s the obvious: building interoperability between internally-built solutions and tools. There’s what OpenFin, Cosaic, and Glue42 are separately working on, creating a browser/container where all apps can talk to one another—internal and external apps living peacefully together. Then there’s something like what State Street and SimCorp are doing, where vendors (and in this case, State Street is in many ways acting as a vendor) partner through the use of open architecture technologies, creating a centralized ecosystem that other outside vendors can easily connect into via an API.

Again, in 2021, I have the feeling that we’ll be writing a lot of these interop stories, so I’ll stop piling on—for now…but this subject is not going anywhere.

GameStop Stopped the Game

I can’t imagine that you don’t already know what this GameStop controversy/movement/insanity is all about, but if you don’t then perhaps this profanity-laden podcast with me, Wei-Shen Wong, and Rebecca Natale, will help fill in some of the blanks. (By the way, I know I’m supposed to put myself at the end of that list, but in case any higher-ups listen to it, I’m the ring leader of the obscenity so please come to me…and please do not listen to the podcast—or read ahead—if you don’t enjoy copious usage of four-letter words.)

Anyway, let’s fuckin’ do this. Honestly, my favorite thing about writing for WatersTechnology is that, as I note at the top, we don’t have to write knee-jerk articles around a breaking news event. We can take our time, talk to a bunch of people, and rather than just react to news, we can think about what it might mean for our readers going forward. And if we can’t find a unique angle, we dump the story and find something else. To defend everything is to defend nothing, and we can’t wade into the knucklehead stuff.

If you work (worked?) at a hedge fund that lost millions because of the Reddit Rebellion (I prefer Capital Rebellion to bookend the attempted coup at the beginning of January, the Capitol Rebellion…but that can be construed as déclassé) then you probably wouldn’t call the GameStop saga “knucklehead stuff”. You know what, I don’t give a shit if you took a beating on GameStop or one of the other companies that were pumped up by r/WallStreetBets. That’s fuckin’ capitalism. You were shorting a company and you knew the risks. Or maybe you didn’t and now you done got burnt. Them’s the breaks, kid.

At least you can take solace in the fact that those who are still buying $GME at $325 (or whatever it’s currently listed at when you read this) are going to eventually take a bath because there’s no reason for this shit-ass company to be valued that highly. That’s also capitalism. Wall Street’s a cruel mistress, and she always wins. Listening to trading professionals talk about the need to halt trading or listening to the billionaire owners of Robinhood talk about how they’re for the people while lamenting the role that they have to play in this thing called capitalism…well, spare me. I’m a conservative and these people sound just like the “conservatives” who were totally cool with the astronomical deficits and tariffs when it was Trump at the helm. You’re just one of the many reasons why people hate finance and don’t trust capital markets firms.

But what the fuck do I know? If ever I start writing about investing, just scroll ahead because I have no fucking clue what I’m talking about. I’m also too goddamn stupid to have any insights on pay-for-order-flow or market structure concerns. I like talking about data and tech. As such, the thing that I find interesting is this: there are dozens—hundreds—of alt data providers that specialize in social media sentiment and web-scraping. A fucking revolution was happening on Reddit—a site that has something like a half-billion users!!!—and these data vendors didn’t have any insights to provide?

I get it, I get it—Reddit has its own lingo and many posts are in meme form. Still, methinks ya missed a trick if you couldn’t figure a way to glean some—any­!!!—insights from a subreddit called r/WallStreetBets that has a few million followers. Maybe that’s just me. Hindsight makes all of us geniuses.

Anyway, I’m talking shit right now, but this will be something that we’ll definitely be looking into going forward. As for right now, what brings a grin to my face is the thought that 25 years from now, there will be a crusty, gray-haired professor at Harvard Business School having to explain how DeepFuckingValue (real handle, not made up) took the entire financial system hostage.

Again…what do I know? I’m sure there are interesting angles that will affect data and tech professionals going forward, so please feel free to let me know what I’m missing and we’ll dig into it: anthony.malakian@infopro-digital.com.

The image at the top of the page is “The Storming of the Bastille, July 14, 1789” by Charles Thévenin, courtesy of the Cleveland Museum of Art’s open-access program.