Before we get into it, first check out this outstanding story by Josephine Gallagher about Rimes Technologies shuttering its market surveillance business. Last week I wrote briefly about Rimes and its new CEO, but this story addresses the new direction the vendor is taking.

Next, while you can read some of my opinions below, you’re probably better served by the thoughts of some of my colleagues.

First, after seven years and half a billion dollars in funding, as Max Bowie writes, Symphony has made strides but arguably has not delivered the “big win” of living up to its early hype as a Bloomberg-killer (I hate that term, but Max used it, and I love Max, so it stays). Max asks how long its investors will continue to back the venture, whether new CEO Brad Levy can steer it back on track, and whether Big Tech could be the way forward.

Then, retiring the Order Audit Trail System (Oats) is a milestone on the long and winding road to implementing the Consolidated Audit Trail (Cat), but Jo Wright says the US Securities and Exchange Commission must make some major decisions in a very short time frame before the Cat is deemed a success.

And finally, Reb Natale writes about QAnon. Actually, I will quickly give some thoughts on that one, but make sure to read that story because it’s a fun one…

QAnon & ignorance

A few weeks ago, Reb told me that she wanted to write about QAnon, Reddit, and the rise of fringe social media sites. I kind of rolled my eyes—“Reb, what does this have to do with what we write about? I get that you’re fascinated by the subject, but what’s the hook for our readers?”

Since I command very little power over the reporters here at WatersTechnology, she basically waved me off and said, “Trust me, it does. I’ll show you.”

Flash forward to Friday, and Reb handed in this story: “Disinformation campaigns coming to a Wall Street near you”. I have to admit, it’s very interesting. Sometimes you just gotta let your teammates run with things they’re passionate about.

I’ll leave it to Reb to explain how Q, Reddit, and the pernicious “chans and kuns” connect to the alternative data industry, but here’s what I think is the most important takeaway: As Reb writes, on January 1, 2021, it would’ve sounded insane to say that Reddit would be the most important social media site when it came to sentiment and driving real, tangible stock market moves. Today, we have meme stocks.

This meme-stock craze might be a fad, or maybe it’s simply the next frontier after hunting for alpha-driving sentiment on sites like Twitter and Facebook. Here’s the important philosophical discussion from her story:

“If you are an institutional asset manager overseeing, for example, a massive pension fund, are you comfortable incorporating data from hedge funds that web-scrape or vendors that pull in ‘sentiment’ from Reddit, the chans, and the kuns—sites that are helping to sow discord in this country and undermine truth? You might think it’s a ridiculous question, but it would’ve seemed ridiculous just a year ago to think that Reddit would be the best driver of stock market sentiment, no?”

Ignorance is bliss, but when it comes to things like QAnon and websites that are tearing at the fabric of our country, you need to be more active when it comes to understanding the data that’s being used to make investment decisions.

Anyway, read her story—it will at least make for a fun/depressing conversation the next time you’re having some drinks with friends.

Blockchain & metrics

For those of you who are new to this column, I think it’s important that you know that I’m not a fan of blockchain/distributed ledger technology—and yes, I do know that blockchain is a subset of DLT, but just the same way that Band-Aid is used to describe adhesive bandages and UFC is used interchangeably with MMA, I’ll do the same with blockchain/DLT, thank you very much. Feel free to ignore me from here on out if that bothers you.

Still, as the editor of this publication, it’s important to keep an open mind and listen to the proponents of blockchain. So when we see a proper use-case for DLT, we write about it. And if there’s any big company in our space that’s positioning itself as a believer in blockchain, it’s Broadridge.

Last month, the tech giant announced in a press release “the successful go-live of its transformative distributed ledger repo platform.” Our Nyela Graham spoke with a couple executives from the company to get a better understanding of not just the repo offering, but the company’s overall DLT strategy.

Let me start by saying that from what I can gather, Broadridge is approaching blockchain in the right way—it’s not this revolutionary, big-bang tech, but a tool that can be used in certain use-cases to improve workflows—and for Broadridge, it sounds more like workflows in middle office. Repo and DLT makes sense. As does proxy voting, a staple for Broadridge. And maybe you didn’t know, but Broadridge has taken on ownership of Northern Trust’s private equity blockchain, which also seems like a logical play. They’re not trying to bring on T+0 in the equities market…they’re looking for inefficiencies in workflows for things that have been highly manual in the past. Makes complete sense.

Now, I won’t get into the merits on whether or not DLT is the best, most efficient way to tackle these types of workflow problems, as I am absolutely not an expert on that. My skepticism comes from the opinions of others who I’ve known for many years covering this industry, but I’ve never built a distributed ledger (or any ledger, for that matter) and can’t explain the nuts and bolts of a blockchain even to a two year old.

What I will say is this: it feels like every time we talk to people who are building these solutions, concrete, independently-verified, hard metrics are tough to come by. For a couple of spots in the Broadridge story, Nyela asked for hard numbers, but the execs weren’t talking. That’s perfectly fine—maybe it’s a competitive/IP thing; maybe they don’t want to put a number out there and risk not hitting that target. Again, that makes complete sense. We don’t have subpoena power, so there’s no need for them to tell us anything, so I’m happy they gave us a look at their DLT strategy.

The problem with that, though, is that it makes it harder for potential users of the product—in theory, our readers—to fully understand what the benefits are. If you want to win converts—or, in the case of the repo DLT, grow the number of users executing, and thus grow the average daily volume—people understand numbers. They can grasp initial investment and ROI; they can justify decreased headcount through automation; they like the idea of improved error rates; and they can get behind liquidity rushing into an illiquid instrument because of innovation.

Basically what I’m saying is this: if the blockchain believers are going to want to win over the skeptics and thus bring people onto their new products, there needs to be more transparency around true results.

Until those metrics come rolling out, it will still feel like we’re in a PoC/beta phase, even as live environments are rolled out. At least that’s my two cents. Think I’m wrong, let me know: anthony.malakian@infopro-digital.com.

The image at the top of the page is “The hellmouth, set design from ‘Il Pomo D’Oro’” by Mathäus Küsel German courtesy of The Met’s open access program.