Vendor Selection Management

John Visti Interview: Vendor Selection and Management | Market Data Strategy

John Visti Madsen is an independent Market Data Strategist that has worked for some of the leading market data vendors on both the buy side and sell side.

John takes us through the importance of correctly planning your market data strategy and what you need to think about when it comes to vendor selection and vendor management.

We also look at the impact of the upcoming regulations including MiFID II on market data and information management.

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Transcript:

Interviewer: Thank you for joining us for what could actually be a FIMA first that we’re doing something of a recruitment video if I get this right.

John Visti Madsen: You could say that. That’s not the only reason why I’m here but I am in fact on the look for a temporary position, as I recently resigned from my current or my previous role at one of the consuming firms.

Interviewer: So perhaps you could tell us a bit about who you are then and what you do.

John Visti Madsen: Yes, my name is John Madsen. I’ve been in the market data industry for nearly 10 years. I’ve headed up market data sourcing strategy teams. I’ve been on the vendor side. The last four years I was on the consumer side doing the strategy for market data sourcing. Spending the money you could say and trying to spend as little of it as absolutely possible. So I’ve done a lot of analysis on which vendors do we use, why do we use them? How do you secure that you have good relationships with your vendors, which is not always given.

Interviewer: So what are the main things not necessarily that people are looking for when it comes to vendors, but that people often forget about when it comes to vendor selection?

John Visti Madsen: I think what you should look at is your own business. What do you actually need and look very carefully at that. Rather than what do you have in your organisation? It’s important that data gets used and you need to find a way where you measure the value of your data. If you can’t justify the cost of some data then you should get rid of it or you should reduce the coverage of that data. We spoke about it a lot at these two days at FIMA already. Lots of data is being sourced multiple times which sometimes does make sense because you want to be absolutely sure, for risk purposes that, that data is absolutely correct.

But other times you may not be able to justify that little bit of extra security in your data quality by adding up to the cost level. So that’s what I’ve been doing. Assessing who the vendors are and what the costs are associated to the sourcing.

Interviewer: What are the main pitfalls then that you often see companies coming up against when getting involved in vendor selection?

John Visti Madsen: The pitfall is often that there’s no clear strategy in place. It becomes too often driven by the business. There seems to be firms where there’s no strategic sourcing and vendor management departments in place, which is absolutely critical if you want to manage your vendors in an efficient way and not only reduce costs, because that is one aspect of it, but making sure that you have the right lines of communication between the vendor and the consuming firm and have a good relationship.

One of the things I’ve worked with is a balance scorecard in fact where you sit down with your vendors, twice a year, as you normally do and what often happens, if you don’t have a structured approach to this, is that you will have a discussion about the incidents that took place within the last two weeks, which is not rational in any way.

So you should structure that conversation a little bit more. You should make sure the whole organisation speaks with one voice, which it does if you have this balance scorecard in place, measuring the value of the relationship on a number of criteria which are important to your organisation.

Interviewer: So when it comes to data optimisation and flow which is of course another area that you deal a lot with. What have been the main issues that you’ve seen recently and how have regulations affected them?

John Visti Madsen: Regulation has affected it in a way that there are a lot of bodies that come with their regulatory requirements and that’s good because that’s a really key area right now. What I do see of a problem is that do you have time to do anything else? That’s often the case that you don’t because regulatory requirements fill out the whole resource pool. But I’m very supportive of that because we’ve been discussing standards for the past many, many years and we can’t seem to agree on how to do things. So I’m really happy that someone higher up has now come with the mandate to say “This is what should be done.” Then organisations will find out how to do that.

Interviewer: Well thank you very much for speaking to us today. If people would like to find out more from you how can they do that?

John Visti Madsen: They can reach me on LinkedIn on John Visti Madsen or John Madsen. I’m relatively easy to find or via the FIMA website. My details are there as well as I’m speaking.

Interviewer: Well I’ll look forward to seeing more of you in the panel session later.

John Visti Madsen: Okay.

Interviewer: Thank you very much.

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