While most people hearing the word “Reuters” immediately
think of an organization that operates a highly-respected global news service, for
many dozens of years the company has relied on the provision of financial
information and related trading services for the bulk of its revenue.
Before it merged with Canada’s Thomson Corp. in 2008, Reuters had created a
number of services for the real-time delivery of stock and bond prices, foreign
exchange and interest rates and data from global commodities and futures
exchanges to professional traders and investors working at banks, brokerages
and investment firms. It also created or acquired services to actually transact
business, including for foreign exchange, securities and derivatives. The Thomson
merger brought legal and tax/accounting services, creating an $11 billion revenue
information powerhouse with a focus on verticals that blockchain technology is
likely to disrupt.
For sure, Thomson Reuters isn’t the only major player in the
financial information world. Indeed, Bloomberg has grown fast since its
founding in 1983 and is now a leader in some segments (such as bond prices),
while other companies, including ICE Data Services and IHS Markit, are global
competitors. But with its broad range of offerings and ubiquity in the global
financial markets, Thomson Reuters remains a leader and one that exerts
tremendous influence: if for some unlikely reason its services are interrupted,
the markets are likely to come to a halt.
From a technology perspective, Thomson Reuters has amassed a good deal of
expertise in building capabilities that will likely be of utility as blockchains
move from proofs-of-concept (POCs) to pilots and beyond. As examples, some
50,000 developers make use of the company’s application programming interfaces,
it currently stores more than 60,000 terabytes of data and its network handled
a record 79 billion messages during a 24-hour period following the so-called
Brexit vote in 2016.
It’s important, then, that Thomson Reuters is making early moves into
investigating blockchain technology, how it might be useful to the financial
markets and what role it could play.
Here’s what the company has done to date:
Thomson Reuters has so far invested in three blockchain startups. The first
investment in November 2015 was in Hijro, which operates in the trade finance
space. Then, in October 2016, it co-led a round in Funderbeam, which is
building a funding platform for pre-IPO companies. A couple of months later, the
company invested in Axoni, a financial markets blockchain platform vendor with
which it had previously worked on a blockchain POC in the equity swaps area.
As with some other large companies, Thomson Reuters is working with more than
one of the significant blockchain consortia. It joined the Linux Foundation’s
Hyperledger Project in March 2016 and then became a member of R3’s financial
markets consortia in August. Earlier this year it became a founding member of the
Enterprise Ethereum Alliance, having already released one offering and hosted
two hackathons in the Ethereum space.
First showcased by Thomson Reuters in September 2016, BlockOne ID for Ethereum is an
identity-mapping service for the blockchain, allowing digital identities to be
mapped onto Ethereum addresses. While the POC supports digital IDs such as
Facebook, Twitter and Google IDs, a likely product path would be to support the
professional know-your-customer services that the company already offers.
Last month, the company rolled out BlockOne IQ, an oracle service
to deliver data to smart contracts. The service initially supports Ethereum and
R3’s Corda, although future support for other platforms is likely.
With BlockOne IQ, smart contracts developers use client libraries to tap into a
wealth of hosted Thomson Reuters data, including cryptographically-signed
current securities, prices, foreign exchange rates, corporate actions,
cryptocurrency rates and financial benchmarks.
Company executives stress that the BlockOne services are beta offerings
designed for POCs and that no decision has yet been made to productize them and
charge for them. But if they prove useful and popular (and you can expect both
of those things to happen), other services will be introduced.
With blockchain technology’s promise in the
financial market, it’s a natural technology for Thomson Reuters to leverage and
the impact will likely be an important one.