The Ryanair of financial information

18 Feb 2003

As a former day trader, taking risks and playing the markets is in John Hockaday’s (pictured) blood. But three years after the dotcom blood-bath, the prospect of taking unnecessary risks is the furthest thing from his mind.

As managing director of Trading Places, a technology consultancy which last month launched an up-to-the-minute pricing information service for the financial markets, Hockaday is focused on just one thing – profitability. Nor is he alone in this regard, he feels.

“This is going to be the year when the profitability of a company and its short-term cash generative abilities need to be foremost in any plans. For companies already delivering products and services the question is how to maintain profitability in an increasingly competitive marketplace and to still be able to invest in future development,” he says.

A self-confessed gadget freak whose road-warrior kit includes a virtual A to Z of mobile devices, Hockaday was inspired to set up his business after searching in vain for a reliable data feed for this day-trading operation.

Hockaday clearly relishes a challenge, for not only is he launching his service at a time of deteriorating conditions for the financial community but also he happens to be pitching his solution against the 800-pound gorillas of the financial information provision market, Reuters and Bloomberg.

Pricing information is the lifeblood of trading houses and stockbrokers – and they pay handsomely for the privilege. One of Ireland’s leading stockbrokers, for instance, has 70 subscribers to a pricing data-feed at a cost of €1,200 per subscriber per month. That’s an annual overhead of €1m for pricing information alone.

It is these fat margins that Hockaday is targeting with Quotespeed through the website Trading Places is the sole Irish reseller of the system, which was developed by UK financial software house Ten 4 Data Systems. The information, which emanates from Ten 4’s data aggregation facility in Frankfurt, costs around €400m per month, translating into a cost saving of up to €750 per subscription compared to other financial information vendors, Hockaday claims. Although he cites Aer Lingus as one of his most admired companies, it’s Ryanair rather than the national carrier that’s his spiritual bedfellow.

The Quotespeed software is supplied as part of the subscription and there is no additional investment in hardware unless users opt for a high-speed digital satellite connection that requires a receiver card to be installed in the subscriber’s PC.

“Until now, there hasn’t been much choice for market professionals in terms of where to obtain the real-time prices they need,” notes Hockaday. “That’s changed now. For any financial manager looking at saving costs on his terminals, the Quotespeed real-time feed is approximately one-third of the cost of a similar feed and requires almost no capital outlay – and that’s a huge saving when you consider that a lot of terminals are used purely for price information,” he adds.

The feed also includes current foreign exchange and bank rates supplied by over 20 leading banks and live news feeds from the major news vendors. Everything that is supplied on the Quotespeed feed can also be supplied for use on a customer’s own website or intranet.

Trading Places also supplies a range of technical analysis software which links directly to the Quotespeed feed, including Tradestation, the world’s leading back-testing software with over 40,000 users worldwide. This innovation brings a powerful dimension to the capabilities of the products.

“Most people who watch the markets recognise that the technical analysts called the moves correctly over the last two years and this has reinforced technical analysis as an essential trading tool. With new highly-geared instruments such as CFDs [contracts for difference] and spread-betting becoming more and more available to the Irish market, it is imperative that anyone who is serious about keeping on top of their market positions is able to monitor them in a cold analytical way – that’s where our products help,” he says.

Hockaday has yet to sign a customer for Quotespeed although one broker, Bloxham, takes the raw data from Trading Places and feeds it into its own internal system. Hockaday says he’s also in ongoing discussions with the Central Bank of Ireland, the Irish Stock Exchange and several large stockbroking houses including Merrion Capital and Goodbody’s. Although the system is already in use at several large European financial institutions including ING Barings in the Netherlands, Hockaday concedes that prospective customers naturally look for a local user of the system for reassurance. There is also an innate conservatism to overcome.

“Financially it’s a no-brainer but it’s a question of at what point does the service become a priority for institutions,” observes Hockaday.

Even for institutions that are committed to their existing Reuters or Bloomberg terminals, Hockaday believes QuoteSpeed may prove attractive as a low-cost back-up service to cover disaster recovery situations.

While Trading Places gradually builds up momentum, Hockaday is busy hatching another idea, a website called Where’s the Market which will provide financial statistics and data to the private investor.

Although the mad days of the dotcom era are a fast-receding memory, the internet is more important than ever to John Hockaday’s business plans. “Using the web to enhance a traditional business model is the way forward,” he concludes.