Jonathan Beyman is chief of operations and technology at Lehman Brothers, as well as an executive vice president. In addition, Beyman has served as the firm's CIO since 2000.
Question: "With sophisticated market data reporting systems, I can report on how often a user accesses any particular service. If an individual uses a service only once a year but still makes $50k on the deal, is it worth it to try to save the fees? Where is the balance?"
I posed this question to our head of market data, who responded: "Save the fees? NO, they get to keep the product. ... I make this trade every day; in fact, I give a user with this ROI home access, the first available blueberry with market data, and I'm still ahead of the game - huge!"
My response: "If it were me, I'd push this back to the business and point out that the lazy SOB can walk 15 feet to use someone else's market data, make the 50K and incur 0 cost. But it's troubling to know that you would cave in like a cardboard box in rain!"
Rejoinder from the head of market data: "If it were your money, and this was the ROI I could achieve ... you'd invest heavy."
Yes, well, that may be. This question goes to the heart of the longstanding issue on Wall Street of keeping big producers happy, yet controlling costs. As you can see from the above (actual) exchange, there often isn't consensus on where to draw the line. It's easy for me to take a harder line, because I'm significantly further away from the inevitable noise that my position would generate. On the other hand, multiply this example by the thousands of other instances where spending requests occur, add in how often the promised revenue doesn't materialize, and it's pretty easy to see how you can lose control of your expense base.
The pragmatic answer is that this is a business-driven decision, and it will often come down to how profitable or senior or important the user is; how the business is doing in general; and how much pressure there is to control expenses. If this question were asked in mid-2002, mine would have been the correct answer. A year later, in much better times, I suspect there would have been no appetite for taking the user's market data away.
And that, my friend, is why all of these jobs are so interesting!
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