January 18, 2011

The Wall Street Journal

Dow Jones to launch forex info service

Dow Jones is close to launching a foreign exchange information service which will represent the latest attempt since News Corp’s 2007 takeover to rethink the company’s business-to-business side and make it work more closely with the group’s consumer-focused flagship, the Wall Street Journal.

The news wire owner, which will launch DJ FX Trader at the end of January, hopes to capitalise on rising foreign exchange trading volumes with “a high premium product” for which it will charge traders “six figures” for each licence.

Dow Jones will be going up against Thomson Reuters and Bloomberg, which have invested heavily in technology to reduce delays in their news and data feeds to milliseconds for markets increasingly dominated by rapid electronic trading.

Financial institutions spend over $1.7bn for foreign exchange news and information, according to Burton-Taylor International Consulting, which tracks financial data providers. However, Dow Jones’ estimated $22m forex market data sales last year trailed far behind Thomson Reuters, at $1.28bn, and Bloomberg, at $518m.

Financial institutions spent $98.2m on forex news and commentary last year, with two-thirds of the market controlled by Informa, Dow Jones and IFR Markets, part of Thomson Reuters, Burton-Taylor estimates.

Les Hinton, chief executive of Dow Jones, said its web-based service would focus on breaking exclusive currency news faster than rivals. Robert Thomson, editor-in-chief of Dow Jones, said the company had instructed its newswire and newspaper journalists to seek out interviews that could move foreign exchange markets.

News Corp, which spent $5.6bn on Dow Jones but wrote the asset down by $2.8bn as the financial crisis weighed on newspaper advertising and B2B revenues alike, had made “a strategic decision to invest in B2B,” Mr Thomson said. It was spending “millions” of dollars on DJ FX Trading, Mr Hinton added.

Citing UBS forecasts that daily turnover in foreign exchange will expand from $4,000bn to $10,000bn by 2020, Mr Hinton said that DJ FX Trader would be the first of several moves to package its news and information for traders of different asset classes.

Dow Jones has invested in algorithmic trading technology and is hiring some former currency traders, but will use outside data to feed the new service’s technical analysis and proprietary charting features.

Mr Hinton said newswire revenues had “dipped” in the financial crisis but were now recovering. The Wall Street Journal was profitable in print, he added, without disclosing details.

 
News Corp has sought to push Dow Jones Newswires and the Wall Street Journal closer together. “The whole idea is that you have a single cost of content but multiple opportunities to repurpose it and profit from it,” Mr Thomson added.

by Andrew Edgecliffe-Johnson