In the world of financial markets, there’s an old saying (from 1984) attributed to former Citicorp CEO and chairman Walter Wriston: “Information about money has become almost as important as money itself.”
More than 30 years later, that sentiment has surely become a truism, especially in an age of fast, global communications, flash crashes, big data analytics and digital currencies. It’s a market that Thomson Reuters knows well.
While most people hearing the word “Reuters” immediately think of an organization that operates a highly-respected global news service, for many dozens of years the company has relied on the provision of financial information and related trading services for the bulk of its revenue.
Before it merged with Canada’s Thomson Corp. in 2008, Reuters had created a number of services for the real-time delivery of stock and bond prices, foreign exchange and interest rates and data from global commodities and futures exchanges to professional traders and investors working at banks, brokerages and investment firms. It also created or acquired services to actually transact business, including for foreign exchange, securities and derivatives. The Thomson merger brought legal and tax/accounting services, creating an $11 billion revenue information powerhouse with a focus on verticals that blockchain technology is likely to disrupt.
For sure, Thomson Reuters isn’t the only major player in the financial information world. Indeed, Bloomberg has grown fast since its founding in 1983 and is now a leader in some segments (such as bond prices), while other companies, including ICE Data Services and IHS Markit, are global competitors. But with its broad range of offerings and ubiquity in the global financial markets, Thomson Reuters remains a leader and one that exerts tremendous influence: if for some unlikely reason its services are interrupted, the markets are likely to come to a halt.
From a technology perspective, Thomson Reuters has amassed a good deal of expertise in building capabilities that will likely be of utility as blockchains move from proofs-of-concept (POCs) to pilots and beyond. As examples, some 50,000 developers make use of the company’s application programming interfaces, it currently stores more than 60,000 terabytes of data and its network handled a record 79 billion messages during a 24-hour period following the so-called Brexit vote in 2016.
It’s important, then, that Thomson Reuters is making early moves into investigating blockchain technology, how it might be useful to the financial markets and what role it could play.
Here’s what the company has done to date:
Thomson Reuters has so far invested in three blockchain startups. The first investment in November 2015 was in Hijro, which operates in the trade finance space. Then, in October 2016, it co-led a round in Funderbeam, which is building a funding platform for pre-IPO companies. A couple of months later, the company invested in Axoni, a financial markets blockchain platform vendor with which it had previously worked on a blockchain POC in the equity swaps area.
As with some other large companies, Thomson Reuters is working with more than one of the significant blockchain consortia. It joined the Linux Foundation’s Hyperledger Project in March 2016 and then became a member of R3’s financial markets consortia in August. Earlier this year it became a founding member of the Enterprise Ethereum Alliance, having already released one offering and hosted two hackathons in the Ethereum space.
First showcased by Thomson Reuters in September 2016, BlockOne ID for Ethereum is an identity-mapping service for the blockchain, allowing digital identities to be mapped onto Ethereum addresses. While the POC supports digital IDs such as Facebook, Twitter and Google IDs, a likely product path would be to support the professional know-your-customer services that the company already offers.
Last month, the company rolled out BlockOne IQ , an oracle service to deliver data to smart contracts. The service initially supports Ethereum and R3’s Corda, although future support for other platforms is likely.
With BlockOne IQ, smart contracts developers use client libraries to tap into a wealth of hosted Thomson Reuters data, including cryptographically-signed current securities, prices, foreign exchange rates, corporate actions, cryptocurrency rates and financial benchmarks.
Company executives stress that the BlockOne services are beta offerings designed for POCs and that no decision has yet been made to productize them and charge for them. But if they prove useful and popular (and you can expect both of those things to happen), other services will be introduced.
With blockchain technology’s promise in the financial market, it’s a natural technology for Thomson Reuters to leverage and the impact will likely be an important one.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.