How Reuters pioneered change in global markets
Monday 15 June 2015
Paul Julius Reuter’s maxim, when he was building his news agency more than a century and a half ago, was “Follow the cable”. It was the era of the telegraph as the world’s fastest means of communication across continents and of the steamship across oceans where cables had yet to be laid. It meant, quite simply, use the latest technology for the gathering and dissemination of news and financial information.
As the hard wire telegraph gave way to radio and later satellite telecommunications, Reuters remained true to its founder’s advice and constructed a global business based on what became, in the latter part of the 20th century, the world’s largest privately-owned communications network.
After more than a hundred years of providing financial, economic and general news and price information, Reuters created through daring vision, judicious adoption of innovative technologies, and its own in-house technical development a new business which had the effect of making financial markets more transparent, more liquid, and vastly more lucrative.
It was the pre-Internet age, long before instant round-the-world communication became universally and inexpensively available.
Credit for seeing the business opportunities, realising the means to exploit them and driving the development to do so, goes to two people: Glen Renfrew, who was managing director, and Michael Nelson, who was general manager.
For a while, Reuters dominated the increasingly profitable business it had created for expanding financial markets. Others saw the commercial opportunities too, and competitors appeared. But Reuters got there first.
Reuters’ in-house technical development in those days was an exciting place to work. It pushed boundaries to their limits in order to build unique products that presented traders with new ways of making money. In terms of scale, geography and market range Reuters was usually ahead of the game in being first to market and leader.
It wasn’t easy. Too often, product roll-outs were delayed, user interfaces were difficult, and product change was not delivered to all clients quickly.
And then there was the rivalry between geographic areas where young and ambitious executives were fashioning bespoke products and services tailored specifically for their regions and making names for themselves at head office as the coming generation of business leaders.
A third complication after Reuters capitalised on its growing success and became a publicly-listed company responsible to shareholders was the acquisition of small, mostly North American entrepreneurial businesses, some of them overlapping so that the same commercial challenge was addressed in different places simultaneously. As one financial analyst remarked during a corporate spending spree in the mid-1980s: “Reuters buys companies like other people buy shirts.”
All of this contributed to inefficient duplication of effort.
Martin Davids makes sense of it all in a chronology, never before compiled, of technical development during one of the most innovative periods of Reuters history. He was a mathematician with a background in real time and commercial message switching systems who managed Reuters technical development in London and later New York.
Besides delving into the archive of contemporaneous accounts, including those published in the now-defunct staff magazine Reuters World, he has been able to draw on the memories of many of those who were there.
David Ure spent the 1970s mostly in product development before moving on to run Reuters' business in Europe. He then returned to product development and strategy as an executive director.
Introducing the chronology he writes that, as well as being arguably the best general and financial news service, “Reuters is and was a wonderful and very valuable business with innovative and revolutionary products that changed the way markets worldwide operate”.
The chronology begins at the start of the technical development function in Reuters in 1964 and ends in 1990 when Renfrew, its champion, retired.
Initially and for many years to come, Reuters was in the hardware business, an idea that may seem incredible to the present generation of leaders of Reuters and its parent company Thomson Reuters. At the end of the period covered by the chronology, software solutions had taken over completely.
If you expect to read a somewhat dry account of how talented product designers and engineers developed complicated electronic boxes for financial markets, you may be surprised. The path to success was not smooth; technical failures are recorded as well as successes. The story is not without touches of self-deprecating humour.
Besides mention of such things as kludges, the ping-pong problem, and a Reuters system that presaged Twitter, Martin Davids gives a flavour of the pioneering spirit at the time. He refers to the phrase on the menu of Antoine’s restaurant in New Orleans: “Good cooking takes time. If you are made to wait, it is to serve you better, and to please you.” Applied to development activities, that meant: Do you want it now or when it works?
His chronicle of Reuters technical development has been produced over the course of the past year exclusively for this website and is not available elsewhere. It starts with David Ure’s introduction and will be followed by instalments over the next six weeks. A second part of the chronology covering the 1990s will be published later.