Bloomberg and Soft Dollars: Do Data Feeds Have ‘Intellectual Content’?
How will the SECís expected "intellectual content" standard for soft dollar research affect advisersí use of data feeds provided by Bloomberg and others? At last weekís Mutual Fund Directors Forum, panelists expressed different views.
"As soon as the SEC gets around to its rulemaking," MFS chairman Robert Pozen, "Iím pretty sure that theyíre going to say market data without intellectual content is not going to be allowed." He noted that are a number of fund complexes that still use soft dollars to pay for data feeds (MFS doesnít), and that those services can be very expensive if paid in hard dollars.
In contrast, John Meserve of BNY Securities Group predicted that Bloomberg terminals and information services provided by Reuters, Thompson, and others will "survive the definition of research."
Dechert partner Jeffrey Puretz said the answer might depend on the needs of the end user. While a data feed might not be considered to have intellectual content to a firm that takes a fundamental research or growth approach, the same data "does have real value" for a quant shop that relies on formulas and computer-driven processes, he said. "Thatís the bread and butter that they digest to come up with their recommendations."