RSRCHXchange: Our Past, Present, and Future
Nearly five years ago, Jeremy Davies and I set up RSRCHXchange, and today our team is now part of the Liquidnet family. Our inspiration for setting up our business was not very different from Seth’s when he founded Liquidnet 18 years ago: inefficiencies in capital markets can be solved with technology. As it stands, execution technology is much further advanced than research. In other words, our niche makes an ATM look cutting edge.
Jeremy used to be a fund manager with his clogged inbox receiving hundreds of emails every day. Unashamedly, I was one of the culprits; an equity salesperson emailing him and all of my clients PDFs of the reports produced by my research department. It was a spaghetti-on-the-wall strategy and standard practice for the salespeople. Throw enough and something will stick. Get the bank’s name out there, and often. The best sales people knew their clients well enough not only to understand their portfolio, but also the themes and companies they wanted to invest in. Yet the same technique was applied: email, and email a lot.
Research is valuable intellectual property of the firm producing it. A huge amount of resource, time and expertise goes into research reports. If there were any doubts, the regulatory change in Europe – MiFID II research unbundling – has proved that research is valued by the buy side and an essential business for the sell side. Despite that, no other IP is disseminated like financial research. The Wall Street Journal and Financial Times don’t email us every article they write. Apple doesn’t email us the latest chart-topping single. This global industry is worth $20bn a year but workflows haven’t adapted enough to incorporate the latest technology.
It was remarkable sitting on trading floors to see execution change beyond all recognition. The growth of electronic and technology-assisted trading has revolutionised dealing desks. As Seth recently wrote in his Financial Times piece, this evolution has enabled best execution and now is the time to focus on AI for alpha. When it comes to portfolio managers and analysts, they are still, by comparison, living in analogue. In fact, we believe that the industry is utilising a mere fraction of the technology available to front office decision making.
Fast forward to today and emailed PDFs have been replaced with links, but the quantum of the deluge is still the same. We built our RSRCHX platform so that the buy side could pull the research most relevant to their role and current interests, instead of being pushed everything by the street. It’s no longer good enough for the asset management community to consume essential intelligence in the old-fashioned way. We have the technology to empower fund managers and analysts with a personalised and customisable research and intelligence platform. Their performance depends on it. Together, as part of the Liquidnet brand, we are striving to better inform the investment decision making process.
By Vicky Sanders, Co-Founder of RSRCHXchange