A specious argument against openness
Was rehearsed to me in a late-night rant last night by someone who works at the FSA.
It goes like this: “If we force the financial institutions to publish their cash numbers in real time, they will be wilfully misinterpreted by ignorant journalists and this misinformation will destabilise the markets, so we can’t/won’t force realtime disclosure”. What utter, utter bollocks.
Let me make it clear: I am not just talking about publishing realtime financial data (cash holdings and trading positions) so that financial journalists and bloggers can read it. It is essential that it is also published in a machine-readable form. That’s what I mean by a public API.
If it is published, then people will compete to write the best algorithms to analyse the data objectively. The banks already do this; it’s called quantitative analysis and they pay huge salaries and bonuses to good quants whose algorithms run on private proprietary data streams from Bloomberg and others. What the FSA should be doing is forcing the banks and fund managers (and eventually, public companies) to make all their proprietary financial data public, free, in real time. Like an RSS feed, or a bundle of RSS feeds, about their positions and trades. Companies like Bloomberg will compete to add value with better and smarter algorithms, but because the data stream is public, open and free, anyone else will be able to do the same. Smart financial journalists and bloggers will put a spin on it with their own algorithms (which will succeed or fail depending on how good they are); companies like Google will develop search and analysis strategies based on public financial data and there will be open-source alternatives which will drive down the price and make everything much more competitive.
So why the fuck are the FSA fannying about and not pursuing this goal?