Richard Jacobi was vendor relations manager for Lava Trading when this interview was conducted during the spring of 2006. He talks about his job and preparing for a career working with market data: "I don't think you will see many courses in school that say Market Data 101."
When eFinancialCareers spoke with Richard Jacobi, he was the vendor relations manager for Lava Trading Inc., a developer of trading solutions for the financial services industry. Founded in 1998, the company was acquired by Citigroup in 2005.
How do you spend your day?
As the vendor relations manager, I have responsibility for relationships with all external vendors. This includes the exchanges, which are comprised of the ECNs (electronic communication networks), the New York Stock Exchange, NASDAQ and the Amex. We use data from a total of 40 different exchanges. I also manage relationships with the third-party software companies that develop applications for Lava under contract.
My job involves fighting a lot of fires. I negotiate contracts, I meet with vendors and I manage those ongoing relationships. Internally, I help to determine product requirements and I review products. I interface with exchanges regarding requirements of the National Market System.
Can you give us an example of your role in developing new products?
We're now starting to develop products for options traders. Typically, we manage our own data feeds that come directly from the exchanges, but we didn't want to do that with options so we decided to look at vendors. We reviewed proposals from Comstock, Reuters, Wombat and others. We developed the requirements and sent out the RFPs, brought in the vendors for presentations, narrowed down our choices and ultimately selected a vendor. Once the project begins, I kind of step away and the development team takes over.
How did you get involved in the market data business?
I started at the NYSE many years ago in the Stockwatch arena. That was a monitoring role, where we would watch trading patterns for unusual activity. Then I received an offer from ADP to be its manager of exchange relations, which is when I first became involved in a market data role. After ADP I went to work for Smith Barney, running data management for its retail branch network, and then spent six years at the New York Mercantile Exchange as its head of market data. I returned to the vendor side with Moneyline Telerate for a couple of years before coming here. I started at Lava Trading in January 2005. I was employee number 201, and we now have over 300. Citigroup acquired us after I started, which has strengthened a lot of our infrastructure.
What advise would you give to someone thinking of entering the financial information industry?
I don't think you will see many courses in school that say Market Data 101. I have a bachelor's degree from Pace University in economics. I've always been on the administrative side of the industry, where you certainly need a financial background and a thorough understanding of the financial industry. You need to understand what market data is and how it's used, including an understanding of all of its nuances. Market data comes in a lot of different flavors: You've got real-time data, delayed and reference data, which is all the data that surround it. Historical data, corporate actions and research information all becomes a big part of market data and what the end users are looking for.
A lot of my job managing market data and vendor relationships comes down to understanding how much is being charged and who pays for it. At large end-user firms, the focus is on allocating costs and who pays for the market data that's being consumed.
What about technical expertise?
You do need to have an understanding of technology. People need to understand how trading and analytical systems work and how they're used. You don't need to know how to program these systems, but you do need to understand their inner workings.
For example, when a feed is going into a black box that can redistribute the data for multiple uses, you must have a grasp of what that means and its implications. In today's world, a lot of trading is done using programs that might rely on time-rated averages or volume-rated average prices, and trade execution is done by programs. In the early days of the market data business, people were sitting in front of screens. Now, nobody is really looking at the feed and, except for Bloomberg, the vendors aren't supplying terminals anymore, so you can no longer count eyeballs to determine how the data is being used. Understanding that issue becomes a big part of managing relationships with exchanges and others that supply trading data.