Listen: Brad Levy, Yelp, United States discussed on P&L With Pimm Fox and Lisa Abramowicz
"I am very happy. I am being joined right now by Brad Levy. He is global head of loans and chief executive officer of market serve. which is I H S market he normally is based in New York but he's here with on site so Brad I want to get started with the concept of data and how that is becoming intricately connected with with the modernization of market so when you're talking about your world what does it mean to have data that gives you that kind of edge yeah so in the loans market and the derivatives market data is tremendously important and not just data but lots of different types of data including what people term alternative data. Atta which for me is just data that is not using your traditional business day to day but may have some insights in the interesting so the data doubted discussion is relative. It's relative to who you are and what you're doing. It's relative over time and more importantly it's dynamic over time where data sets combined and create additional data sets on top of the fact that you're consuming either base data or alternative data and then the combinations of backup so alternative data. Are you talking about Yelp yelp reviews and things like that you know. Is that sort of the concept here. I mean yelp reviews could be a form of alternative data for sentiment on some consumer product but to inequities trader Raider credit default swap data might be as far as alternative data because an equity trader typically will not be looking at credit derivative day to day today so it's it's it's on the edge of what is alternative data to that particular instrument trading day to day. Are you trying to create data feeds that then go into different algorithms that can then basically be the streamed different traders and submitted into their models is at the idea here yeah so ultimately old out will be feed for a lot of data. Today's used in terms of people looking at it in actioning but overtime all data will become more digitized or more accessible via feeds. When that happens a lot of analytics that you can run at the time you're consuming assuming that data or after or before over time those the modernization of the data feeds allows you to do a lot more with it and then action that that insight that you may be gleaning from multiple streams of data so it's not just one stream of data being digitized and a feed its many streams of data being digitized robust analytics being created around it with an insight that you can action that may result in inequity trade you shutting down a power plant or getting into a risk position that you didn't want to be in the day before so then. How are people using these different feeds and sort of synthesizing them? How do they know how wait all of the different points and bring them together well. I guess you don't at any given time and it it. It's relative over time so today. There may be a certain point of data. That is not interesting it all tomorrow because it's an event in the market. That could be the most important information that you want to get to so. I do think there's an element of data both changes over time. What what is commodity ties today. Alternative today is monetize tomorrow but also the macro backdrop of what is going on in the world may drive importance of data and as we move to cloud as we modernize as we did two ties as sensors proliferate on every device in every person everything you're going to have a huge amount of data at his fed analyzed in action. We are in inning three of probably tripleheader in the modernization of data in the world including the financial services system. It's it's I'm smiling because I'm thinking of an article I once read about how the US government collects a lot of information and a lot of it could be completely useless but with the AI that they sort of overlay on top of it they can discover things and that's a lot of how the the big discoveries have been made and they've been made by accident. I want to show gears a little bit because you do tabby. We all of these data points and you do have access to so many things. Do you have a sense of where credit quality is kind of leaning these as well. I look at the markets as a forty year bull market in rates going down and I would estimate a twenty year bull market in credit going up. We did have an interruption in the credit going up seventy nine or really but it really wasn't a credit event as it was a market event in in my view it definitely manifested around credit but the reality was there wasn't a huge washout with the exception of several institutions in the financial services world. There's there's bear stearns but in terms of major credit event for the world it felt like that and it seemed to move on within a couple of years I would argue that since the late late nineties we're in that credit boom and over time things get looser and cycles turn everybody's trying to predict turn of the credit cycle somewhat. Pinto recession or some other other geopolitical thing I'm not trying to time anything like that but I do think it's a bit long. I'm not sure things are loose. As much as there's a lot of financing available and over time those things tend to turn the question will be will it turn gradually or will turn involved away or will it be multiple. Volatile turns will add up over time to a credit event if you don't think that two thousand and eight two thousand nine was a major credit event what would a major credit event look like. I think it was an event entrusting the markets which is the broader concept of credit maybe but an actual credit event event that drives a lot of defaults beyond just a few markets in housing and other areas where they're truly were major credit events in that market but in the loans market and leveraged finance and corporate bond markets and the student loan markets and consumer credit generally things did get tight but I personally my view. I don't think it was the credit event that I wash out and a reset like the late eighties for example which we can still experience at some point again in the world of physics and chemistry. Reu- would argue that things go up and then do come down and that different combinations of elements with physics drives dynamic outcomes and that's why it's hard to predict just real quick here. we've been talking a lot about financial technologies here the Fintech conference and I guess when we talk about leverage loons. I don't think about market. That's particularly advanced technologically logically. Where are we in terms of moving away from fax machines into the modern era there yes so there is no doubt that the loans market and all markets need an amount of digitisation modernisation tation there are some faxes in the industry that are utilized to distribute information around. That's been going on for thirty years in the last several years. We've moved dramatically medically away from faxes into proprietary feeds or more structured feeds that are not facts based but I would argue that there's many elements that need to modernized and alone markets whether it's the documents themselves facts is being utilized more direct connectivity. It's heavier asset class that isn't as has a digitized but there have been major advances in the last five or ten years incremental digitisation that have taken some taxes out of our life have moved more automations is from documents to feed more importantly have combined many processes to take settlement times down from something that may have been in the mid twenty s to be honest in terms of days and poor loans the US down forty plus percent in the last couple of years. We've made a lot of progress post dodd-frank Brad Levy. Thank you so much for being with with me today. Brad alleviate is global head of loans and chief executive officer of market serve of I H S market.."