“Quality over Cost” and 2 More Facts on Using Market Data

Global buy-side and sell-side market participants agree that data accuracy and data feed reliability are the most important drivers when choosing market data providers. Read about these and other key findings revealed in new research by Coalition Greenwich together with SIX.

 

By Matthew Nurse
Global Product Director, Financial Information, SIX                                     

 

Data is expanding all around us. Both buy-side and sell-side professionals are exploring better ways to consume data, analyze it, and benefit from its abundance. In a recent study, Coalition Greenwich together with SIX interviewed 79 professionals to understand their global market data consumption and related trends. 

 

What Is Market Data?

Capital markets professionals think about the term “market data” in numerous ways. Most commonly they believe it refers to pricing and related data, including exchange, OTC and third-party pricing, as well as reference data that incorporates fundamentals, ratings, and other descriptive information. However, some also refer to market data as news and research or expect it to include derived data and alternative data. Market data is a broad category, and different requirements emerge depending on roles and areas of responsibility.

How to unlock the full potential of global market data? This is the overarching question of the study exploring key themes, such as the considerations influencing technology and market data vendor choice, market data spending trends, and future expectations for data technology. Here are three key findings:

1. Data Accuracy and Feed Reliability Are Key

The vast majority of participants choose market data providers based on accuracy of the data and feed reliability (90%). Other highly valued requirements include data conformity, such as ISINs, conventions, and other characteristics, as well as the reputation of the data provider. This has consequently influenced the desire for greater vendor choice with vendors competing on quality as much as coverage and cost.

Although the cost of data licenses is often a source of criticism, they rank lower on the list of important criteria, especially on the buy side. Sell-side participants are challenged by cost but are still sensitive to performance and quality considerations, like data accuracy, feed availability and timeliness.

The same considerations also affect the willingness to change providers. Here, again, quality prevails over cost.

2. Data Budgets Are on the Rise

The cost of market data will continue to grow. While the cost of data (licenses, technical cost, and the use of possible cost-saving avenues such as packaged services) does not top the list of key considerations for vendor choice, companies need to adjust and plan for them.

In fact, the vast majority is planning to invest more into market data. 80% percent of buy-side participants believe data budgets will rise over the next 12 months. Over one-quarter anticipate an increase of at least 5%. Meanwhile, sell-side respondents are expecting larger increases as more data sources are needed and higher frequency of data demands more investment.

3. The Future of Data Sits in the Cloud

Technology, in particular the use of the cloud and APIs, is a central theme to all companies. In fact, they are expecting to consume even more cloud-deployed data, including real-time market data, portfolio management data, and risk analytics in the future. Looking ahead over the next three to five years, cloud stands out as the preferred market data delivery method (64%), with APIs following (46%).

Preferences tied to the cloud are often associated with flexibility, ease of use, lower cost and the speed necessary to get new data up and running, although transition costs cannot be overlooked in the short run.

The sell side has been slower to adopt the cloud than the buy side and, at some point, will catch up as resources and know-how permit. Meanwhile, sell-side participants will focus more on APIs in the coming years to foster market-making practices.

Cloud adoption is a marathon more than a sprint. However, over the next three to five years, buy-side as well as sell-side participants will future-proof their market data strategies by turning to the cloud for data delivery. Its scalability and accessibility will enable organizations to harness vast amounts of data and derive actionable insights.

 

Global Research: Market Data in Focus

Coalition Greenwich, in collaboration with SIX, interviewed 79 global buy-side and sell-side companies to find out what influences the decision to use a particular market data provider, how the type and frequency of data consumed varies, and which views prevail on future use cases, sources, and delivery.

Get All the Results Now: LINK

 

 

Biography

Since joining the company in 2023, Matthew Nurse is the Global Product Director for Market Data & Pricing at SIX Financial Information. In this role he is responsible for growing the global footprint of SIX and defining key product strategies for growth across data, content and technology within market data.   

Core to his responsibility is aligning product build and market adoption whilst combining market data with the wider universe of reference, corporate actions, ESG, Index and regulatory data. Matthew works closely with financial institutions to develop data strategies, help digitise and automate data & analytics and explore new deliveries and storage for optimal market data use and consumption.

Prior to joining SIX, Matthew spent 15 years in various roles within financial market data and technology most notably with Bloomberg in Switzerland and Singapore.