Need to Know News (NTKN) acquired by German-owned Market News International

It’s hard to know what to make of this deal. I’ll try to analyze it more later, but in the mean time here’s what the buyer, Market News International has to say about why it wants NTKN:

The price paid for NTKN was in the “single digit million dollar range,” according to Deutsche Boerse documents. NTKN becomes a subsidiary of Market News International. Both companies deliver their products primarily by leased data lines but both firms maintain Web sites with material derived from their professional products. NTKN also provides a “squawk” service, by which breaking news is delivered in audio form.
The economic statistics are one ingredient of a vast chain of high-speed trading technology that has drawn waves of mathematicians, computer programmers and information technology specialists to the Wall Streets of the world in recent years, to supplement the more traditional savvy of human traders, strategists and analysts.

While the fresh economic numbers have been fodder for trading computers, developers have been trying to extend the ability of machines to interpret words and their context so that more of the second-by-second flow of information can be used to guide high-speed trading.

The release of the sensitive economic data is tightly controlled by government agencies to ensure news firms receive the material at the same time. Then they all compete to deliver the data faster and in more useful formats and combinations than their competitors.

As it is, faster than human traders can react, the computers analyze the trading environment and execute trades using carefully constructed algorithms designed to squeeze an extra margin of profit on the basis of speed.

This so-called algo trading by carefully programmed computers has steadily become a major generator of trading transactions, accounting for sizable portions of equities trading volumes each day. One recent estimate was that fewer than 300 high-frequency trading firms account for more than 70% of all stocks trading volume this year. Hardly limited to equities, high speed strategies are being increasingly applied to a wide range of asset classes.

As more firms follow the technological lead of the largest securities firms, investment banks, hedge funds and other market participants, information providers as well as market exchanges have been under pressure to develop faster and more reliable sources of the data delivery measured in only dozens of milliseconds. There are 1,000 milliseconds in 1 second.

Deutsche Boerse AG, part owner of Eurex, Europe’s largest futures market, this month is launching a pan-European exchange, Xetra International Market, which is built to allow investors to trade stocks from six European countries. The exchange has also bid for a controlling stake in the Warsaw Stock Exchange from the Polish government. Earlier in the month, the exchange acquired a majority share in Stoxx Ltd, a company intended to provide it broader access to the market for exchange traded funds. With Switzerland’s SIX Group AG it acquired Dow Jones & Co.’s one-third stake in STOXX Ltd, a firm that calculates and licenses stock-market indices.

13 thoughts on “Need to Know News (NTKN) acquired by German-owned Market News International

  1. So Harada gets what he ultimately wanted, something which Gomez wanted for CEP News but Vigilant Futures pulled the plug and didn't give him time.

    It also washes away the JED Capital connection as far as NTKN is concerned. Whats in it for MNI is anybody guess, but price for additional IT input/angles on HFT is perhaps worth it for them I guess. Wonder what the sale means for NTKN staff?

  2. Congrats Harada and co! Its good to see that NTKN made it through a tough economic time when we saw a lot of casualties. true survivors.

  3. Neither CEP, nor NTKN were a Ponzi like Dex Tv for instance.

    I think the key to NTKN's survival was not committing the stupidity that CEP News did, i.e. start believing in your own press, unrestrained expansion, prentending to be a "leading news-provider" before getting there, massive PR spin and all that rubbish and inviting scrutiny from the world at large, yet shying away from tough questions about backers/investors. There's only a limit to which you can test the patience of your financial backers, i.e Vigilant Futures & they lost it.

    I mean NTKN & JED Capital connection was not a mystery – everyone knew or got an answer when asked. In DC its clear to everyone. So why was it rocket science for CEP News to hide the Vigilant Futures connection until this blog revealed it??? (At least thats where I found out)

    Furthermore, I suppose in NTKN's case, with Harada being involved both with JED Capital & NTKN – meant he kept a tight grip on things at NTKN. Vigilant Futures let Marco Gomez have a free run at CEP News – the result was before all to see.

    Finally, from a critical standpoint, to be fair to Gomez, fate dealt him a cruel hand. When he opened Bureaus beyond Canada – he had to attract journalistic talent at market prices overseas (even if we assume all this was for something else).

    Whereas in NTKN's case, when they expanded beyond North America (much later than CEP News, i.e. Harada was setting-up as Gomez was pulling out), to UK & Germany for instance, the financial press job market in Europe was pretty messed-up. Hence, their overseas wage bill, whether they admit or not, was considerably lighter than CEP's. Reuters-Thompson merger, FT's losses, etc., etc. created some 600 redundancies in alone London. They were hiring while most were firing.

    However, congrats Harada & Co. indeed, clever management, with a little dose of good fortune, triumphed over spin.

    Maybe (or not) herein lies the riddle – either acquire the status of an RTT Newswires through long-term editorial goals (they came out of nowhere too and are now credible enough) or have a credible enough product offering, which may not crack the wider market against the major wires but makes business sense for a larger company to takeover your ops.

    Vigilant lost their nerve & money, JED Capital quietly kept both….or so I think! That does as the last commentator said, makes them "survivors" or some description. NTKN does not constitute a vanity purchase for Market News, at least not in this economic climate.

  4. My congrats goes to Deutche Bourse – great price, sounds like they got a really good deal on this. NTKN is very tech focused which fits well with an electronic exchange.

  5. Ok, knowledgeable commenters, can I run this by you, and you tell me what's right and what's not?

    NTKN had a technological advantage that JED used to earn quite a bit of money. Likewise, CEP (copying?) used the same (similar) super fast technology and Vigilant Futures reaped the benefits.

    Reuters and DJ et al got wise and improved their technology and the new guys' technological advantage was largely lost.

    Or is there more there?

  6. Who copied the others' model/IT platform type is unclear – all these companies sprung up at nearly the same time 2005-2006 if I am not mistaken.

    You see if IT capability and speed of info is the entry point, its difficult to say who's caught-up with whom. For bigger players, if they can't catch-up and see a product offering thats good, adds value to their portfolio of holdings, they can buyout the smaller player as this recent development illustrates.

    The new guys' tech advantage depends their respective whiz-kids, as for there being more – I am sure there is….otherwise so many of these wires wont spring-up. If nothing else, the NTKN development will encourage others. I see CEP making a return under a new name…or maybe it already has.

  7. Any idea why the FBI was investigating this whole situation?

    I was told that two companies mentioned on this site– and presumably not the obvious pairs — were linked.

    Also, why couldn't DJ, Reuters, Bloomberg get these new guys booted from the lock-ups if they were just fronts for prop shops?

  8. The big players cant have the smaller wires booted out because they, like many others have no proof of any wrong-doings. Also ultimate authority rests with the Govt body whose press briefing it is. So by way of decorum, its highly unlikely major players would gang up on these botique wires or start complaining about third parties – that'll open up another can of worms. Afterall the over-riding common principle here is that they have a right to be there as much as the major players. Far from complaining, Market News shared many of the same lock-ups as these guys and were happy to make their acquisition of NTKN. I think the answer lies in the IT platforms and not the lock-ups.

  9. Assuming John Harada profited in this deal may be grossly incorrect. This may be reflective of a failure on the part of JED and NTKN to effectively profit from their collaboration.

    As for MNI's reasons for buying, there may be physical infrastructures, in addition to the delivery platform, that are extremely valuable. Has anyone looked into the supply and demand of fiber optic wiring out of the DC lockup?

  10. Well if you think the JED NTKN Harada arrangement was bad, I just heard another great one from an inebriated friend of a friend. Apparently a trading firm has an exclusive back scratch deal with Level 3 to get the data from the lock ups to Chicago a couple of milliseconds ahead of anyone else. Wonder what the government thinks about that!

  11. I heard the same thing from some data vendors. Level 3 has a deal with a trading firm for exclusive latency from DC area to Chicago. Other firms are forced onto a path 0.7ms slower. Probably the only thing to be done is for data vendors not to work with the trading firm. I wonder what would happen if the SEC became interested.

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