Yesterday, FreightWaves and Barchart announced a new data and content sharing partnership: Barchart’s cmdty product will imported into our freight market data platform SONAR, and FreightWaves’ editorial content will be republished on barchart.com as one of the site’s Featured Sources. Barchart, which was founded in Chicago back in 1995, is one of the original Internet-based financial data providers. The partnership will help Barchart’s vast audience of commodities futures traders learn about freight futures, which FreightWaves will launch early next year.
We spoke to Mark Haraburda, Barchart’s CEO, by phone.
Haraburda took the helm as CEO in 2016, but has been at Barchart since 2007. Haraburda began in sales, building out Barchart’s institutional business in equities and commodities, but then went on to help add more data streams, forge new partnerships, and get involved in creating a cloud-based API business.
“We’ve evolved into a full-fledged provider of market data and information, covering not just commodities and futures, but stocks, foreign exchange, and options,” said Haraburda. “We’re a news provider and a trading software provider, but that original subscription-based web business is what helped us get started.”
We spoke about how the financial data business has evolved over the years, the rise of alternative data, and the value that Haraburda sees in a partnership with FreightWaves.
“The bandwidth requirements have grown exponentially because of electronic trading, which took off in the early 2000s. You need bigger pipes—infrastructure has had to evolve,” Haraburda said. “Speed and latency have become a big part of the game for many customers; people have moved from copper wire to fiber optics to laser and wireless transmission to speed up delivery and test the boundaries of physics as to how fast information can be sent from point A to point B.” Haraburda went on to say that the way data is accessed has changed. The tools used to display and analyze data—and make trades based on it—have become far more powerful, especially as new, more efficient and portable code languages have been adopted.
One of the points Haraburda made that surprised us was that fairly high barriers to entry have been erected in the financial data provider business. One might think that the cost of accessing and delivering information would be driven down by competition on a more level technological playing field, but that’s not how the industry has evolved.
“Financial exchanges started making the shift from member-owned organizations to public companies around the year 2000,” Haraburda said. “They have restructured into for-profit public companies and maximizing shareholder value has become critical for them. It’s opened up new opportunities, but a lot of the cost to access data has increased. Cloud computing has given startups a better chance to challenge incumbent providers, but to be a full-scale, fully integrated firm like we are is an expensive proposition.”
Haraburda also talked about technology’s role in generating alternative data sets for financial market participants. Traditional equities traders use financial information published by public companies to determine the value of and risks to stocks; alternative data is aggregated and analyzed independently to cast a different light on a company or industry. Examples include tracking social media mentions of a new product to judge the success of a launch, using satellite imagery of a manufacturer’s storage area to predict earnings before they’re announced, or using dry van spot rates to forecast trucking carriers’ stock prices.
“New sets of data from satellites, drones, and IoT sensors are becoming really important,” Haraburda said. “We’re developing our own proprietary alternative data sets, whether that means aggregating lots of different sources or creating our own unique data. It drives curiosity and creativity, and traders use it to generate alpha and try to beat the market.”
We wrapped up our conversation by reflecting on Barchart’s new partnership with FreightWaves.
“We have a pretty special media property where we have a giant audience and we are able to marry together people interested in the stock market as well as commodities,” Haraburda began. “Freight fits very well because a lot of that freight is involved in transporting commodities. When we talk about about the information that FreightWaves is making available to different sectors like trucking, and providing more transparency, and developing a futures market around it, partnering with barchart.com makes sense because it’s the largest audience for people looking at futures. It’s the perfect place to promote what you guys want to do.”