Financial market participants are data addicted, and those in the municipal market may be finding fewer places to get their fix. Historically, our providers have been a mixture of small- to medium-sized independent firms and units of larger organizations. Recent consolidations have reduced the choice of data sources. But, below the radar, work is underway to give market participants access to more data at lower cost.
Bloomberg may still be our largest provider, but ICE has joined the club with its purchases of IDC, S&P Security Evaluations (SPSE) and The Muni Center (TMC). Strong data creation, aggregation, and analytics make them a competitor in our space that can stand up to Bloomberg with the loss of only one competitor through the merging of SPSE and IDC evaluations.
Blackstone entered the mix with the creation of Refinitiv made up of various Thomson Reuters data sources and platforms. It included MMD as well as the municipal piece of TRPS, their pricing service. Recently the LSE entered the fray with its ownership of Mergent Inc, a provider of terms and conditions data when they agreed to purchase Refinitiv. Now the Hong Kong Exchange (HKE) has entered the mix, which if they are successful, would leave ICE and Refinitiv as competitors to Bloomberg with the only loose end being Mergent which would probably be sold off as it does not fit the HKE model.
Worst case we still have three large data providers, two of which have added to their portfolios in the past few years, whether we end up with Refinitiv or the LSE and Bloomberg. In the larger scheme of financial data these positionings don’t mean much, just a changing of a few deck chairs. In the municipal space, given what they represent, they will still produce data, however some users may find themselves having to align with one provider over the other given data needs or platforms of choice or possibly finding their data fees increasing feel the need for varied data. They may find themselves feeling hemmed in by three large organizations dictating use of data, feeling the marketplace turning non-competitive. Watching the corporate maneuvering is only a bit better than watching paint dry.
As it turns out things are not as dire as it sounds. Over the past two years I’ve been working on projects of interest and have met many other municipal professionals doing the same. It seems there is no lack of competition, inspiration and innovation. Many of the people I’ve met are no longer affiliated with larger organizations and are working, as I am, on areas of interest.
One thing I have learned over the past two years is that the daily grind of a corporate job gets in the way of investigation, creation and achievement. I know several people who have been downsized or retired and who are now working on projects that promise to materially improve the marketplace.
I have been working below the radar on a holistic approach of valuations and technology, including artificial intelligence (AI). MMS Analytics creates a continuum of data in a noise-free environment allowing market activity to show itself updated in real time. History and relationships are exposed for comparison allowing a more meaningful analysis. Originally aimed at a couple of niche groups it quickly became apparent the end results are usable by any professional participant.
The potential of AI within my work as well as tied to some of the work done in the machine-readable initiatives, the Environmental, Social and Governance arena, and even toward issuance and investing, is immeasurable. I have several friends who are working on machine-readable data, applying XBRL to CAFRs that municipalities produce. They are working with this and other technologies to analyze and score these issuers for the sake of openness and transparency. The range of interest in the work being done has surprised me. I recently had a former CIO reach out asking what I was working on and what others may be doing— he wanted to participate.
Many of us have discussed the potential of working together, of linking our projects and outputs for the benefit of the market. Openness and transparency and linkage of activity are very real for our market. If some of the projects now in embryonic stages can take a few steps forward, there could be a reshaping of how data is created, shaped and used.
New data would be created and deeper analysis of not just our market but of the basic fabric of our municipalities, governance and the intersecting relationships between them and national policy.
Competition may seem stifled due to the current consolidation and in the short term may cause some angst but there is very real work that needs to be done in infrastructure, housing, healthcare and beyond.
In the end I think participants will find they’ve lost nothing to the corporate posturing, their data addiction will be satisfied by the traditional sources but more so by the work going on by the creative, independent initiatives digging deeper.
I believe the future of the municipal market remains transparent, innovative and energetic.
