Wall Street big wigs J.P. Morgan, Goldman Sachs and Morgan Stanley make money by mining data but it's a very expensive endeavor on their part. This is why they're pushing for a plan that will pool their resources together to create a single company that will collect and analyze data for all of them. They figure it will save them a ton of money on costs since they are all basically doing the same thing.
This was detailed in a report by wsj.com which also talked about how the united effort can provide them with consistent data which could help streamline pricing and overhead costs. This move is proof that more and more banks are coming to terms with the idea that they need to cut on costs in order to survive and adapt with the times. With the demand for traditional banking dwindling, profits are jeopardized and so these financial institutions are forced to be creative, even to the extent of exploring a merger that would have been otherwise impossible over ten years ago.
In the same post, the planned project will be called Securities Product Reference Data or "SPReD". The new company is expected to be ready in the next six months or even a year if all goes according to plan. It was reported that each of them would be pooling a budget of seven figures to make it happen.
In a post though in financemagnates.com, it seems not everyone is happy about the planned merger. When news about the deal between the titans of banking broke out, their stocks immediately took a hit. J.P. Morgan went down 0.88%, Goldman Sachs dropped 0.11%, and Morgan Stanley lost 1.00%. The article also pointed out that such a deal can be used to manipulate the movement of the market which could prove to be the biggest hurdle these banks need to overcome.
