The global spend on market data topped $30 billion at the end of last year. The costs are showing little to no signs of coming down even in the short to medium term. According to Burton Taylor’s analysis now has to be the time for the financial industries to take back the control of market data spending. Brexit is around the corner but the financial institutions are more interested in grasping not only their costs but also the precise areas of business consuming the most data.
Due to no full-proof analysis of spending evolved around time there are no answers to questions of why the costs doubled than the previous month by the firms. In certain cases there is a 10% increase in monthly market data vendor bill in some financial institutions.
As every small incremental costs mounts up fast, there are direct costs which leads to billing getting more complex. By the addition of the add-on services in order to help clients save money the institutions are adding on more costs. Also there is indirect costs around data governance and regulatory compliance to add. The fundamental review of the trading book, rules out that the banks have no choice but to use more data to run models and back testing.
To gain more control over their market data start by reducing the waste making sure no new requests of new sources for data from their vendors that will not be used. The recycling of data by being smarter and reusing the already acquired data for the new purposes.
The only solution is harboring hopes of overcoming this data cost problem is to ensure to extract every single drop of value from their market data. Due to the technological advancements the firms can now be on top not only in their data direct costs like complex billing but also in the indirect cost around regulations. To address the issues of rising market data which has claimed the industry for too long now, the financial institutions must take advantage of the technological improvements.