Greenwich Associates: 54% expect increased spend on consolidated data feeds

Dan Barnes

The onset of the COVID-19 crisis is highlighting the importance of market data infrastructure for both buy-side and sell-side firms, with pricing data feeds in many over-the-counter (OTC) asset classes having broken down in volatile markets. Analyst firm Greenwich Associates has published the report ‘Market Data Budgets—Spending Trends and Outlook‘ which has found that in equity markets there is an expected increased in spend over the next 12 months.

“Third-party data providers and aggregators account for nearly 75% of market data budgets, although a third of this spend is ultimately passed onto exchanges for their direct feeds,” says Brad Tingley, market structure and technology aat Greenwich Associates and co-author of the report.

Accurate, real-time data feeds are essential to most trading businesses and even more critical now as firms navigate unprecedented volatility. With traders operating remotely, previously a rare occurrence, even more stress is being applied to the distribution and infrastructure supporting data feeds.

According to the new study, banks, brokers and other sell-side firms pay an average $140 million per year for market data. Asset managers, hedge funds and other buy-side organizations pay about $44 million per year. These estimates include fees paid for consolidated feeds, direct feeds, terminal/desktop products, security/reference data, and index data. Firms also incur additional expenses for infrastructure, support, connectivity, and maintenance costs that can amount to half or more of annual data purchase spending.

Understanding where in the workflow data feeds are being implemented and which users are accessing the data is essential for any firm monitoring their usage of market data. Despite this, only 16% of market participants are satisfied with their market data distribution and reporting systems. With users and regulators alike scrutinising market data costs, data providers can greatly benefit their customers by helping streamline this process.

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