Max Bowie from Inside Market Data, speaks with Lynn Martin, head of ICE Data Services, about the challenge of pulling together those disparate acquisitions into a cohesive whole.
Lynn Martin seems modest—embarrassed, even—about the size of her office, a large corner unit with city views in the old Interactive Data offices at 100 Church Street in lower Manhattan, a stone’s throw north of the World Trade Center. As if to downplay her role heading Intercontinental Exchange’s data business—incorporating the former Interactive Data—she describes how the office will soon be divided in two, with the corner window going to whoever will occupy the other half.
But the importance to the exchange of her role as president and chief operating officer of ICE Data Services can’t be understated: At a time when exchanges are increasingly dependent on revenues from market data and associated services, such as networks and co-location, Martin is running data at the largest global exchange in the world by revenue—something that ICE has achieved in a mere 17 years, compared to the lofty heritage of second-largest CME Group, albeit via acquisitions of exchanges with significantly more history, starting from the base of the Continental Power Exchange, and gobbling up other markets, such as the International Petroleum Exchange, the Singapore Mercantile Exchange, the New York Stock Exchange, and the London International Financial Futures and Options Exchange (Liffe).
In addition, she’s running a company that—via its 2015 acquisition of Interactive Data—now constitutes the third-largest data vendor, behind Bloomberg and Thomson Reuters.
“ICE has gotten everyone’s attention. They’re aggressive, they’re smart, and they’re selective in the acquisitions they make and the datasets they acquire—they go after what they feel has the most unique position in the market and the most potential for growth, and what complements and expands their current business,” says Douglas Taylor, managing partner at Burton-Taylor International Consulting.
Scaling the ICE Cap
Martin’s own entry into the exchange world came as a result of that same aggressive and selective attitude, when she spotted an opportunity and made a leap from Y2K projects at IBM to Liffe in New York. Before joining the exchange, Martin wrote code for the ConEdison power company and for IBM before becoming a project manager in IBM’s financial business area. But the Long Island, NY, native already knew where she wanted to work next: derivatives.
“Then, derivatives were at an inflection point. Liffe was at the forefront of electronic trading, and the markets were already devolving from floors—standing in a pit, shouting orders—to the markets we have today,” she says.
After 12 years, in 2013, Martin’s time at Liffe culminated in being appointed CEO of NYSE Liffe US, during which time she also served as CEO of New York Portfolio Clearing, a joint venture between NYSE and the Depository Trust and Clearing Corp. (DTCC). Her next step was becoming COO of ICE Clear US, before being appointed president and COO of ICE Data Services in July 2015. With those speedy steps, Martin had been exposed to every facet of ICE’s business, giving her an appreciation of not just data products and sales, but where the data came from, and how it is used by clients.
The importance of this became clear when ICE immediately went on a data shopping spree, with a focus on over-the-counter asset classes and reference data, snapping up SuperDerivatives, Interactive Data, S&P Capital IQ’s evaluated pricing and terms and conditions business, and CMA (Credit Market Analysis). “The reference data business is one of the most systemically important areas in the data world—for example, reference data for exchange-traded derivatives, corporate actions, terms and conditions data. And because we believe this is so important, we’ve been heavily investing in it over the past year, such as expanding its coverage globally with a larger breadth of securities in EMEA and Asia Pacific, and the attributes we cover within those securities,” Martin says. The upshot of this is a stronger evaluated pricing business, and the ability to expand the exchange’s indexes. “The more securities you have terms and conditions for, the more you can value…. And all of our indexes now use our own evaluations and reference data,” she adds.
With the acquisition of SuperDerivatives at the end of 2014, ICE founder and CEO Jeff Sprecher approached Martin about starting the Data Services business—though she notes that ICE has been in the data business since 2003 with its collection of 12 global exchanges and six global clearinghouses. “2016 was a year of bringing together the assets of those different businesses into a cohesive data strategy. My view is that the sum of the parts is far greater when you bring them all together… and now it’s about having a conversation with customers about how we can serve their data needs,” Martin says. “We approach customers and say ‘What’s in your portfolio?’ because we can provide an entire solution.”
In some cases, these customer needs can be met by allowing them to select from a menu of separate, a la carte services. In other cases, where overlap exists between a portfolio of products serving similar use case, it makes more sense to consolidate and integrate these into a new, best-of-breed product.
The first of these to emerge from ICE’s data acquisition spree is ICE Connect, a new client workstation for viewing data, news, fundamental data and charts, along with instant messaging and an order-touting component for executing trades on ICE’s markets, created from existing products now all under ICE ownership. ICE, for example, had its own trader workstation, WebICE, and a proprietary instant messaging application used by around 70,000 traders. Meanwhile, Interactive Data’s Desktop Solutions division had several terminal offerings, ranging from the institutional-level Market-Q to the more retail and advisor-focused eSignal and FutureSource tools. Finally, SuperDerivatives, which was traditionally known for derivatives and foreign exchange pricing applications, had just entered the data terminal market with DGX, a budget workstation that allowed users to build their own sets of content and capabilities via an app store. Yet individually, none of these delivered on the potential of the sum of their parts.
Consolidating five disparate platforms into a single service isn’t just about eliminating the cost associated with maintaining multiple offerings. “It’s a more fulsome offering than what any of those individual pieces ever had. FutureSource never had native order routing or instant messaging, for example,” Martin says. “It’s a broad market data analysis tool that gives users the ability to execute on ICE but is not limited to ICE. If you think about the energy and commodities markets, they aren’t just about derivatives that trade and clear on a single platform. It’s about an ecosystem—and that could involve supply and demand influencing the price of contracts, related contracts around the world, news, activity on equity markets. Everything is so interrelated that you can’t treat them separately.”
ICE began rolling out a beta version of ICE Connect to a small group of energy and commodities professionals who were active users of WebICE and ICE’s IM platform in the second quarter of this year. Adoption and feedback have both been very positive, Martin says, and the exchange has added third-party content to help clients manage risk, such as Dataminr, whose social media-sourced news alerts can give more timely notifications of events such as energy policy changes, weather news, or oil or gas pipeline explosions, and ClipperData, which provides freight shipping information that gives indications of commodities supply and demand, and thus can impact commodities prices.
Driven by Choice
In another example of integrating acquired businesses, ICE has doubled down on an area that sources initially suspected the exchange would want to divest. When ICE acquired then-NYSE Euronext in 2013, many suspected Sprecher would want to dump the SFTI (Secure Financial Transaction Infrastructure) network business and its costly proprietary “Liquidity Center” datacenters in Mahwah, NJ, and Basildon, UK. Yet ICE clung to the physical assets for the operational efficiencies they could deliver, instead divesting the software and data platform assets of the cobbled-together NYSE Technologies in a series of deals. When ICE acquired Interactive Data, it melded the vendor’s 7Ticks low-latency infrastructure business with SFTI, and in February bought the Atrium Networks business from Canadian exchange TMX Group, which acquired the network provider in 2011.
Again, Martin says maintaining these different infrastructures—with their different latency profiles—comes down to making clients happy. “Customers like this model because they can choose to either just use one or multiple raw feeds, or they can have one entry point to consolidated and raw feeds,” she says.
Simplification and consolidation is an approach that the exchange is applying elsewhere in its organization. For example, ICE no longer houses any technology at its Atlanta base, but is consolidating technology into its primary datacenter site in Chicago, and its liquidity centers in Mahwah and Basildon, and is closing the Interactive Data office in Boxborough, Mass., and the old Interactive Data Desktop Solutions (formerly eSignal) office in Hayward, Calif. Unlike other exchanges that have chosen to run their technology from third-party datacenters, ICE stuck with its own facilities. “We think the level of resiliency and security that we provide in our offering is a value-add for our customers—and it also serves as the backbone of our services,” Martin says.
In addition to providing products and services that meet customer demand, Martin says ICE is heavily focused on innovation—especially when this can go hand-in-hand with client demand.
For example, in response to client demand, ICE released a feed of exchange-traded derivatives reference data in April, and expanded it over the summer. “When they’re transact-ing in ICE contracts, customers want all the fundamental data associated with those—such as terms and conditions data, first day delivery data, among others. That data is all available, but no one brought it together before as a machine-readable feed before,” she says. “At ICE, we are pretty obsessive about culture, so that permeates through the organization. And we’re very focused on providing services that customers ask for in the manner that they ask for them. And there are certainly opportunities to innovate, even within basic areas like bid and offer data. For example, our Integrated Feed product, which came out in 2016, is a combination of bids and offers, with an order’s position in the queue as well. That came out of demand from clients, and contributed a lot to growth at NYSE last year.”
ICE is also a very collaborative place to work, Martin says, adding that she speaks frequently with Sprecher. “A business unit leader is tasked with developing the strategy, then that gets discussed at the weekly management committee meeting, which brings a variety of perspectives to that—say, an operational or technology perspective, or whether a go-to-market strategy might affect another side of the business,” she says. “Jeff is a very unique individual. He challenges all of us by being a working manager in the same way that we all are—so he has the 30,000-foot view but also understands all the details. That’s something that significantly shapes our culture.”
Martin’s own contribution to that culture has been shaped by her background and by good advice from mentors over the years. “I’m of the view that you learn everything from the environment you operate in, and you can learn a lot from interacting with those at the same level as you, as well as your superiors and subordinates,” she says. “I’m a quant at heart. My background is programming and math. That’s probably why I end up so much in the weeds. So… people would probably characterize me as being very detail-oriented. I’ve been told that I’m more in the weeds than others in my profession. I take it as a compliment—most folks would say it’s a good thing that I understand the products and have the desire to make them better, and want to understand customer needs at all levels.”
Part of this comes from sage advice to treat others as you would treat yourself. “The way I’ve interpreted that is I tend to listen more than I talk, because when I have something to say, I want to make sure my opinion is heard,”—i.e. that others will reciprocate the respect that she showed them by listening patiently, she says. A second guiding principle came from her first mentor at IBM. “They said you can never over-communicate. And I didn’t understand the importance of that until I became a manager, because it’s fine for you to be the one coming up with a strategy, but when you communicate that… it’s important that feedback gets bubbled up to management, and is fed back down the chain.”
For example, a key piece of feedback about the new ICE Connect workstation is that even in its limited beta form, it contains more content and functionality than traders expect, and has required a lot of “hand-holding” of the part of ICE’s global desktop support team and technical account managers to help users transition from WebICE. The exchange will continue to add content to ICE Connect over the remainder of this year, concentrating on providing “deep” coverage of energy and commodities initially—though with content on that “ecosystem” of other asset classes—before looking at expanding the rollout. “As that initial launch group has gotten more comfortable, we have taken it to larger groups at their firms, and to other institutions,” Martin says.
ICE Data Services Insights
When it comes to the global financial marketplace, technology continues to drive the dynamics of our industry. When markets were more manual and intermediated by people alone, the flow of information was limited to the distribution capacity of human networks. Today’s electronic markets, coupled with the proliferation of markets due to fragmentation, have multiplied the volume of market data exponentially.
While everyone talks about “best execution”, regulators aren’t looking for every trade to set a new world record for the lowest transaction costs. At ICE Data Services, we think of best execution as a measurement of execution quality that can demonstrate that your trades are occurring within the context of current market conditions.
We recently surveyed 118 financial professionals, including chief compliance officers, portfolio managers, risk managers, risk officers and executives, to better understand the best execution analysis processes at their firms and their plans for addressing MiFID II. The stats included are based on their responses.