Greenwich: Data analytics now more valued than market structure knowledge

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Three out of four capital markets professionals say data analysis will be the most valued skill on trading desks over the next five years, and 85% plan to increase their spending on data management technology in the next three to five years.

The financial services industry currently spends $1.4 billion annually on consolidated market data feeds and market participants pay another $300 million per year on alternative data. That spending appears to be going nowhere but up. About 95% of capital markets professionals recently shared with Greenwich Associates that they expect alternative data to become more valuable in the next three to five years, and more than 75% of say the same about direct market data feeds.

“Market participants now have access to tools that allow them to make sense of nearly unfathomable amounts of both structured market data and completely unstructured information,” says Kevin McPartland, head of Research in Greenwich Associates Market Structure and Technology Group and author of The Future of Trading: Redefining Data. “Putting data to good use will require an influx of new talent to the trading floor, and data analysis will be the most valuable skill on trading desks over the next five years.”

Capital markets professionals believe insights from data analysis will have the biggest impact in two areas: investment opportunities and liquidity sourcing, as automation creates huge new datasets across nearly every function on the trading floor. “What is considered normal today would have been seen as leading edge only five years ago,” says Kevin McPartland. “At that pace of change, every financial institution in 2020 needs a data strategy.”

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