A modest proposal to Thomson FinancialSince the Reuters acquisition – written by the “mostly” roving reporter John.
I suspect that Thomson is suffering from a slight dose of corporate indigestion. In a fast moving world can Thomson wait before making their next move? Let’s just suppose that they decide to become more of a force in the buy-side connectivity space. There are few options available out there but there is one strategy that I think could completely overshadow the Fidessa acquisition of LatentZero.
There are several parts to the strategy:
Make a strategic investment in Thinkfolio. It’s the leading buy-side Fixed Income modelling tool. The management are strong, experienced and retain stakes in the business. Don’t buy the whole thing – give them enough money to motivate but not too much to reduce incentives. – Can this be done at a reasonable price? Absolutely.
Take the Autex business unit and combine with Tradeweb.
I have heard rumblings that this is in progress anyway. It’s a good move.
Tradeweb is ugly as sin to look at but it’s a product that offers genuine value to the buy-side dealer. Roll that into Autex. Why? Try and get Tradeweb into more shops that may be mainly equity but do have Autex. By now the big players are using Tradeweb so it’s mopping up the remnants that is left.
Can this be done at a reasonable price? Reorganisation within the firm – of course.
Buy Charles River Development. This is a no-brainer really. CRD have moved beyond their roots in the US to being a global business. But as with most buy side independent vendors they lack critical mass – there is not enough strength in depth. They have been in play for a while as an acquisition target so why not make Lambertus an offer?
Can this be done at a reasonable price? Probably.
Buy Flextrade. This is the leading broker neutral EMS. Functionally excellent. The firm has done really well to offer a cross product offering but the firm has a number of weaknesses. One is the technology: C++ on UNIX with X-Windows, in house messaging layer, in-house FIX engine. It can be argued that this could do with a refresh.
Can this be done at a reasonable price? Wildcard.
So what do Thomson do if they buy this mix of products?
1. Work on integrating Thinkfolio and Tradeweb – all FIX based but in an elegant integration.
2. Sell the other parts of the Autex/Thinkfolio/Tradeweb trinity to firms that have less than three in place (maybe not many new opportunities but worthwhile)
3. Get CRD and Flextrade to work on full functional integration
4. Look to provide the next generation of these products in an AJAX based front end (something like this)
5. Be responsive to client requests.
Disclosure (from the author, John) – I do not have any financial interests in any of these firms, I don’t own shares, options or any other instruments in these firms. I do know various people at these firms – this article is not based on any non-public information.