“We think it’s a good strategic fit that complements our already rich suite of products that we offer to clients to handle their trading infrastructures and hand their massive data feeds,” says Larry Leibowitz, NYSE Euronext head of global technology in an interview yesterday.

Wombat has been the leading global player in offering low-latency market data and direct data feeds from ECNs and exchanges to feed into automated trading systems. It has installations in most of the top 15 investment banks.

“When we looked out in the market, we were looking at firms that could help us in this space. Wombat is clearly the leader we saw,” says Ron Jordan, EVP market data services at NYSE Euronext in the interview. The deal will give NYSE Euronext a much stronger direct market data offering which it could marry with algorithmic trading, direct market access and risk management tools. “One of the big things that an exchange does is that it generates market data and the big trend is towards direct data and this gives them a much stronger direct market data offering, “ says Larry Tabb, founder and CEO of TABB Group.

While NYSE Euronext currently provides access to market data feeds that it produces, there is an opportunity to provide an aggregated service offering of direct data feeds such as NYSE, Nasdaq, BATS ECN and DirectEdge, notes Tabb. “Wombat is going to be exchange neutral. It will have feed handlers for many different exchanges outside of ours,” confirms Leibowitz.

Emphasizing Wombat’s role as an independent carrier of data, Jordan says, “Wombat has traditionally been an enabler of our data and for our customers of other people’s data. “That will continue,” says Jordan. According to Tabb, “Wombat doesn’t just provide access to NYSE. Its protocols are used around the world and you’re looking at basically synergies from (connecting to) markets everywhere.

NYSE Euronext plans to integrate Wombat’s market data enterprise software and services with the NYSE TransactTools connectivity and messaging business. NYSE TransactTools houses the Secure Financial Transactions Infrastructure (SFTI) network, which provides a network of transaction services including connectivity to various execution venues and third party services such as order management tools. Noting that the two product sets (Wombat and TransactTools) are complementary, during the interview, Sam Johnson, EVP and CEO of NYSE TransactTools, says, with the SFTI in the mix, they can be made available to the market in different ways.

“With SFTI’s soon to be global network, and all the different data centers scattered around its markets, you can put trading technology like algorithmic trading engines in a data center co-located next to a market,” says Johnson “Using this technology, you can consume, process, analyze and make trading decisions on data on the lowest possible latency and get orders executed in the market,” adds Johnson.

NYSE Euronext is also acquiring Wombat to help customers deal with “the rising cost and latency demands of market data, which many of them can’t provide themselves because of the cost,” says Leibowitz. “Customers have expressed a need for as much data as possible, while they’ve also expressed concern about the rising cost of the data, he says. “The need for data has exploded in terms of products. It used to be Level One and now customers need depth-of-book products, agrees Jordan, NYSE Euronext’s head of market data services. “The volume of each of those data products has exploded as well,” says Jordan. “It’s a double whammy for those firms in managing this data,” he says.

But Tabb warns that “direct data feeds are costly. You have to buy the market data independently and you have to connect and you have to get servers in the exchange infrastructure and you have to do that for a whole bunch of (markets),” he says. “To the extent that they can get Wombat more fully integrated into the TransactTools network and put that more onto the Internet, that can act as a strong competitor to Reuters,” says Tabb.

Meanwhile, the sale of Wombat should not come as a surprise to the industry. there have been rumors over the past two years that one of the investment banks could acquire Wombat to prevent their peers from getting access to the same technology. That was followed by rumors of a sale to Thomson Financial, which is in the process of merging with Reuters. “There have been a number of people who have been looking to try and acquire it,” observes Tabb. “It looks like at the end of the day, NYSE was either the highest bidder or the guys that had the most compelling story,” says Tabb.