Report: Advanced Technology Use Gives Market Data a Boost

In a new study, Coalition Greenwich[1], in collaboration with SIX, interviewed 67 global buy-side and sell-side firms to discover and analyze the drivers of market data consumption and distribution, and emerging technology adoption. For the second year, market participants continue to value data quality, accuracy, and reliability over all other considerations when choosing market data types, frequency and vendors. Participants are also increasingly consuming data using advanced technologies such as cloud and APIs. Moreover, the use of AI/ML is growing in importance as new applications for data analysis are developed.

Audrey Costabile, Market Structure & Technology, Coalition Greenwich

David Easthope, CFA Market Structure & Technology, Coalition Greenwich

Summary of Findings:

• Spending on market data is projected to rise—again. Echoing our 2023 results, nearly 60% of participants anticipate an increase in spending of 1% to 5%. In some cases, this increase is expected to be larger, particularly in equities trading and investing.
• The expansion of investment and trading strategies across regions and products is influencing how respondents select market data sources and providers. Data selection now sits squarely within business units or teams, rather than being made in primary regions.
• Consumption of real-time data is becoming a competitive differentiator and is growing well beyond trading. Although the majority of respondents rely on multiple frequencies of data, including real-time, delayed, historical, end-of-day, etc., the consumption and use of real-time information is attracting a higher percentage of spending and supports the further adoption of APIs.
• Historical tick data is being used for a variety of analytics by nearly all participants. Mission-critical use cases for this data are aligned with solving for regulatory needs, such as market abuse, MiFID II trade reporting, and market conformity.
• How data is being delivered and received is changing. Although more respondents continue to receive market data over internet connectivity via on-premise infrastructure, adoption of the cloud has increased significantly since our 2023 study. Presently, 50% of participants receive data using internet connectivity from the public cloud versus only 30% a year ago.
• Respondents expect to demand more efficient methods of data delivery over the next 3–5 years. APIs will rise in importance, while desktop solutions, FTP/SFTP and other types of legacy file transfer will decline due to inefficiency, risk and the need for manual interventions. 70% of respondents agree that the preferred market data interface will shift further to APIs over the next 3 to 5 years.
• Emerging technologies are set to enhance market data delivery—at some future point. Three-quarters of respondents believe AI/ML will contribute the most to enhancing market data delivery and consumption—an acknowledgement of the power of generative AI.
• The top consideration for employing AI/ML applications, like generative AI and LLMs, is generating better investment decisions (while coupled with human decision-making).

Methodology:

This study is the second in a series designed to better understand the trends in and challenges of market data consumption by asset managers, wealth managers and broker-dealers in the United States, the United Kingdom, Europe, and Asia.

Between April and July 2024, Coalition Greenwich employed a questionnaire to gather responses from 67 buy- and sell-side firms. The majority of insights stem from professionals in front-office roles, including portfolio management, trading and research at buy-side firms. To get a full range of views, other roles in the sample include the middle- or back-office market data functions.

To download the full Market Data Study, please click here.

Biographies

Audrey Costabile is a senior analyst in the Market Structure and Technology team at Coalition Greenwich. She has over 20 years of capital markets experience spanning trading, data analysis, regulation, policy, and industry research.

David Easthope is a senior analyst and heads up fintech research on the Market Structure and Technology team and has over 20 years of experience in the capital markets sector.

[1] Coalition Greenwich, a division of CRISIL, an S&P Global Company, is a leading global provider of strategic benchmarking, analytics and insights to the financial services industry.