Market data: Quality over cost and technology shift towards cloud
Global buy and sell-side market participants agree that data accuracy and data feed reliability are the most important drivers when choosing their providers.
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With the expansion of data, buy-side and sell-side professionals are exploring better ways to consume data, analyse information, and benefit from its abundance. A study conducted by Coalition Greenwich and SIX interviewed 79 professionals to understand the usage of market data by market participants and emerging trends.
Most commonly, capital market professionals use the term “market data” as a reference 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. Some others think of it as news and research, derived or alternative data. Regardless of definition, market data is a broad category, and different requirements can emerge.
Asset managers care about quality over cost
Most participants (90%) choose market data providers based on accuracy and feed reliability. Other highly valued requirements include data conformity, 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 license prices can be a source of criticism, users tend to rank this criterion lower on their list. A stand out aspect of asset managers is that they seem to be more specific when it comes to functionality, compared to wealth managers or private bank professionals, who lean towards an “everything matters” perspective.
Data budgets are on the rise
Approximative 80% of buy-side participants, including asset managers, 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 collection demands more investment.
The transformative force of the cloud
Looking ahead over the next three to five years, cloud stands out as the preferred market data delivery method (64%), with APIs following closely (46%). Preferences tied to the cloud are often associated with flexibility, ease of use, lower cost distribution, and the speed necessary for initial data operations.
The results of this study are a call to action for financial data and services vendors to provide more consistency, coverage, innovation, flexibility, and quality with their market data to support the industry as it tries to keep up with many new and evolving data needs.
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