Summary
Financial Information providers have entered the slowing part of the curve Credit crisis consequences do not yet seem to be over in spite of past injections from sovereign funds
Analysis
Financial information providers will not only be affected directly by the credit crunch. Merril's move to sell its stake at Bloomberg and Financial Data speaks volume about the future evolution of the industry.
As it happened in the aftermath of the dotcom bubble, financial information providers suffer from the downturn of the investment banks, although they benefit from the uncertainty which triggers the hunger for financial news.
Merril has surely been a strong feeder of sound advice to Bloomberg in terms of product design and content. Although at this point this is not as important as it was at the foundation of the company, the quality may decrease unless the now first information provider finds other ways to keep up to its own standards. Not an easy task with the current state of the art of technology.
Added to sell its stake at Bloomberg, the decision to sell a controlling stake at Financial Data Services speaks volumes on the opinion of the investmen bank on financial data providers foreseeable future. In the same way that some financial groups are relasing its asset management or insurance branches, the firm is cutting its bounds with the less rewarding sides of its business.
From another perspective, Merril is creating a feeling of 'black hole' around itself. Was the initial guess on the total mass incorrect?
As one of the biggest Investment Banks, it should be its responsibility to clear the air as soon as possible and create stability for a market they have taken a greatest part in creating.
At this point in time Mr. Thain may be re-pondering its decision....
