Mid-market data vendors are using recent acquisitions to achieve greater scale and gain a technical edge, combining newly purchased assets to create high-performance data capture and distribution infrastructures and more rounded offerings with broader coverage.

When hardware ticker plant vendor Exegy acquired datafeed and feed handler provider Vela last May, the deal immediately brought Exegy an “outstanding” bench of existing business in the form of Vela clients, some of which had originally been customers of Vela predecessor SR Labs and acquisitions such as Wombat (from Nyse Technologies), Object Trading, and OptionsCity.

However, it also gave Exegy the chance to create a reengineered consolidated datafeed distribution system, by combining its hardware appliances with Vela’s datafeed infrastructure, rolling out the boxes to provide high-performance data capture at the points of presence (PoPs) that serve Vela’s feeds. The vendor mapped out its vision of this “unified platform” within the first two months following the acquisition and completed the technical integration by the end of last year.

Over Q1 of this year, Exegy has rolled out its appliances at PoPs in New York, Chicago, London and Hong Kong. In Q2, the vendor plans to deliver consolidated feeds via that unified platform with the combination of feed handlers developed by both vendors—for a total coverage of more than 300 data sources, while the vendor continues to build out coverage of emerging markets—and during Q2 and Q3 will upgrade appliances and software at existing client sites.

“For our consolidated feed consumers who subscribe to Vela’s SuperFeed product, they will just need to change a logical network connection. They’ll see better performance, lower latency, and more consistent latency, as well as better reliability and uptime, because this will leverage the automatic failover we’ve designed into the system so all sites will run hot/hot,” says Exegy CTO David Taylor.

The benefit to clients (and also to Exegy itself) is that the vendor can focus all its efforts on supporting a single platform, rather than having to spread its investment across two or three different code bases, Taylor says.

Also this year, the vendor will combine its hardware appliances with order gateways from SR Labs, Object Trading, and OptionsCity to form a unified execution platform. This provides the potential for Exegy to feed low-latency data from SuperFeed into its Signum predictive analytics, which can in turn generate signals-based orders and send them to market via its order gateways, where the Vela acquisition—once fully integrated and upgraded—can provide the missing pieces in a data-through-execution information and order flow.

For Options, which acquired data platform and content provider Activ Financial last October, the deal yielded immediate benefits, plus the promise of more tech wins further down the line. Options CEO Danny Moore says that following the acquisition, Activ closed a deal with an unnamed top-five global asset manager to provide a market data platform running in Amazon Web Services’ cloud.

“The big opportunity for us is on the commercialization side. Activ had a lot of good assets. Now we need to put more sales and marketing functions around those,” Moore says. “At Options, we’ve always been very strong on sales management and prospect management, and we’re always very aggressive around the end of financial quarters. Even in the Wombat days, we tried to run the business like a public company in the hope that one day we would be.”

At the time of the acquisition, Options said it would use Activ’s data platform to build an app store of content and analytics. Since then, Moore says the vendor’s technology and development teams have been working on new developments, and is ahead of where he originally expected. For example, Options is performing a gap analysis of the vendors’ combined feed handler coverage of global markets, and will proactively build out coverage where gaps exist. Another example is building out support for Microsoft’s Azure cloud to complement Activ’s existing support for Amazon’s and Google’s cloud platforms.

In addition, to give its sales and marketing organization more ammunition with which to go to market, Moore says Options will focus more of its development resources on not just building services but “productizing” them for a broad audience. “That’s the difference between getting a product beyond those first few clients and up to 100 clients,” he says.

Buying power

That element of fully capitalizing on an acquisition may take longer. Indeed, these integrations are not always quick wins: Australian market data and trading workstation provider Iress acquired French low-latency data and connectivity provider QuantHouse in 2019, and has spent the past 18 months integrating the vendors’ technology to gain commercial advantages and better serve clients. It now has “a solid roadmap of tasks for the next 34 months,” says Arthur Tricoire, general manager, commercial for Iress’ recently formed API Data and Trading Solutions business line.

For Iress, the acquisition gave the vendor a proprietary market data collection infrastructure, whereas it had previously relied on data sourced from other third-party distributors to serve its 9,000 clients and 500,000 end users worldwide.

“The big driver behind the acquisition, besides revenue growth, was sourcing and market data distribution of exchange price feeds,” and being able to leverage a proprietary data collection mechanism to power additional solutions with greater control over the cost and reliability of data, Tricoire says. “So, the first thing was enhancing the client experience and ensuring the quality of data that our brand is attached to—so making sure that we are in control of the data we’re providing.”

This is an important factor when managing around 200 client connections across a global network, he adds. “By managing that directly, you know you’re in control, and you can manage the quality. If you’re outsourcing that, then you’re relying on other vendors,” he says.

This especially becomes an issue—as the vendor discovered during the integration process—when dealing with the data administration aspects of bringing additional products to clients who themselves provide services to their client bases. While the vendor can now simply provide new services via APIs as needed by clients, it would previously have needed to obtain licenses from the original data source to provide other services, such as broader distribution.

“Because you are managing the collection and distribution, you can bring data into third-party platforms. But if you are getting data from third-party vendors, you are limited in what you can do with that data downstream, and what clients can do with it,” Tricoire says. “By controlling the overall data, there is no cannibalization issue for a third party that is not willing to allow distribution. Clients can provide data to their customers, and/or Iress can serve these clients’ customers—the client is free to decide how much they want to be involved in that distribution.”

Integrating QuantHouse allowed Iress to identify “immediate synergies that could be addressed by in-sourcing their data collection,” Tricoire says. Within the first 12 months following the acquisition, the vendor began migrating groups of markets from indirect to direct sourcing. The vendor has also combined the Iress and QuantHouse engineering teams under Tricoire, and his next priority is creating a unified back-end platform that Iress can leverage across different products and businesses.

“In terms of really unifying the back-end platform, it’s probably a 24-month journey ahead,” he says. “The analysis work is well underway, and we’re defining the roadmaps.”

The next step, Tricoire says, is making clients aware of what the vendor can now offer. “As a result of those migrations, it positions Iress with a comprehensive feed and data platform for streaming data solutions and historical tick solutions, provided on-site, or in the cloud,” he says. “Our next priority is to make existing clients aware that we have new products available, and that Iress can now be a one-stop shop.”

One-stop stopped

Trading technology provider Pico Quantitative Trading was also on track to become a one-stop shop for clients’ data and trading needs, following its acquisition of Redline Trading Solutions at the start of this year, and with more acquisitions mapped out for the near-term. Pico had used Redline’s InRush ticker plant to power a managed execution offering since 2011.

However, Pico recently ran into a setback when a deal to merge with special-purpose acquisition company FTAC Athena fell apart, with Athena claiming that Pico did not provide certain financial information required for the deal to go ahead. Neither party responded to requests for comment about the deal.

In a document supporting the proposed deal, published last year, Pico outlined its “acquisition pipeline overview,” describing four “representative acquisition targets.” One, described as a “low-latency market data and common API” provider, was presumably Redline. The other three are broadly defined as an “OEMS, pre-/post-trade trade and portfolio analytics” provider, a “global market data vendor of record,” and a “financial data platform (EOD, reference data).”

So for Pico, beyond the Redline acquisition, there may still be further integration projects yet to come.