Dow Jones Telerate
Development Strategy

David Kastillo, Country Manager CIS, Dow Jones Telerate

Revolutions Upon Revolutions

There can be no doubt that we are witnessing a revolution in the way that communication systems underpin our businesses. There can also be no doubt that this revolution will be viewed as bringing the most significant changes to the global financial industry that we have yet seen. Furthermore, there is no doubt that the rate of change of technological development is continuing to increase.

Moore's Law of 1965 still stands, but it looks likely that Gordon Moore's observations on the exponential growth in memory chip performance will be overtaken by a more rapid increase in the rate of development of the technologies and services which are being built upon the microprocessor chip.

The Impact on Information Provision

In his popular book 'Being Digital' Nicholas Negroponte, Director of the Media Labs at MIT, defined the new technologies as having four basic characteristics; decentralising, globalising, harmonising, empowering.

Each one of these characteristics holds wide-ranging implications for service providers in the financial markets. Distributed network technologies are providing the facility to move away from centralised models where it is appropriate to do so. The emergence of ubiquitous global network provision, through both terrestrial and satellite links, mean that even smaller financial businesses can adopt a global position. Technological development, and the changes in cost models for information and communication technologies, is to some extent 'changing the playing field' for financial service providers. A level of 'harmonisation' is occurring in the market, increased by the need to adopt sets of global standards within the technologies themselves. As for Negroponte's 'empowerment', it could be argued that through access to this new wave of standards-based lower cost technologies, financial institutions, and their employees, are being empowered to widen their strategic approach information services.

From the financial service providers' point-of-view, these core developments provide a range of opportunities that were, to a large extent, unavailable before. The new technological infrastructure will serve as a basis for strategic partnerships between financial institutions and the financial service providers in the marketplace.

An Audience of One

A key change for the information services industry generally is being brought about by the current communications revolution. This is a move from the dominant model of broadcasting common content a large audience to a model of providing content to an audience of one. The customisation of information and services to specific client requirements will become a crucial requirement. Additionally, a high level of integration of services will need to be achieved so that maximum leverage can be obtained from the data services. Real-time market data, historical data resources, transactional services, risk management systems, and analytics tools need to be tailored initially to market segments, but ultimately to single user needs, to the audience of one.

The Delivery of Services: First Class/Second Class

The emergence of the Internet over the past four years has been nothing if not spectacular. Internet is no longer the preserve of academic research. Currently, about three new businesses debut their presence on the World Wide Web every 75 seconds. Internet is offering itself up as a network of choice for a wide range of business activities. However, there are some significant issues that need to be addressed in order for Public Internet to provide core financial services effectively; issues such as reliability, timeliness of delivery, and security.

One model that seems appropriate until such time that the network of public Internet can offer the performance and security is the model which has been operating in the world of transportation for some time, a First Class/Second Class system.

The First Class/Second Class IP network model offers, at one end, high speed secure connectivity over global private extranets and, at the other end, global connectivity over the public Internet. The extranets being put into place by the major market providers are, in essence, private Internets that use standard Internet technology and overcome current public Internet restrictions through bypassing that network. They will provide appropriate connectivity for clients who require high levels of reliability, security, and performance. Where high-speed performance and the highest levels of security are not essential, public Internet already offers a global infrastructure. As these issues are addressed on public Internet it is likely that more business activity will reside there.

Interoperability

Internet technology has provided a major push towards the uptake of a standards approach and, subsequently, of interoperability of applications and services. The sheer scale of recent Internet development has resulted in the emergence of standards for email, security models, directory services and a range of other elements. The effect of this push upon service providers in the financial markets is being seen in two ways. Firstly, they are responding to the move towards Internet standards by rapidly embracing these standards in their own products and services. All the major vendors are bringing Internet-standards services to market. Secondly, the service providers are addressing the problems that have arisen with the speed of development of Internet technologies. These 'problems' include the integration of secure closed networks with the currently less secure open environment of public Internet. Rapid uptake of the Java language and environment on public Internet can also be seen as a 'problem'. Java offers a range of advantages such as networkcentricity of applications and services, rapid development cycles, and cross-platform support. At the same time, some financial institutions see problems with Java's maturity, robustness and bandwidth requirements. There is no doubt, however, that Java will have a significant part to play in the applications and services of the future.

The Outlook

The rate of change in Internet technologies looks likely to increase in the short term. The global financial market sector will move with these changes. It may be that this move is along parallel tracks initially, using Extranets and private Intranets. There will, however, be convergence in places, if not total convergence. Even as a yardstick, the Internet is highly relevant to this market sector.

The views expressed in this paper are the personal views of the author, and do not necessarily represent Dow Jones Telerate's policy.

Extract from press release of Ken Burenga, President,
Dow Jones & Company, Inc. 20 January 1997

Dow Jones & Company recently announced a $650 million investment program for Dow Jones Telerate.

This investment will be focussed on:

• Expanding Content. News, prices, and analyses will be broadened to provide complete coverage of major asset classes for sell-side and buy-side institutions, built upon a new expanded historical data warehouse and an extended base of research and analytical programs.
• New Delivery Systems. Data from Dow Jones Telerate and its content partners will be delivered to customers worldwide over a new high-speed, secure network using standardised Internet-protocol delivery technologies. Easy to use interactive capabilities will be an integral element of the new delivery system facilitating real-time trading, messaging, and research with such features as three- dimensional graphics and access to original-format documents.
• Customer Orientation. Dow Jones Telerate will make an unprecedented investment in establishing and implementing a pervasive customer care program in which sales and support staffs will work more closely with customers, assist them in achieving solutions, and partner with them to achieve their profit objectives.

"We are acting decisively at Dow Jones Telerate to exploit recent advances in technology, build on traditional market strengths, and tap new revenue streams. By broadening and deepening its information and analytic resources, in concert with the global resources of Dow Jones and its authoritative outside providers, Dow Jones Telerate will become a comprehensive source for customers' information and decision-support requirements. Global transactional capabilities will enable customers to perform every activity they require from information gathering, to analysis and evaluation, to execution and settlement."