Substantive Research, the data discovery and analytics provider for buy side firms, has published analysis of market data pricing, with a focus on opaque pricing across indices, ratings, research and analytics markets, terminals, and pricing and reference data.
Its findings build on a June 2022 study which identified that there was a large variance in market data pricing. At the time, index market specific pricing disparities between wholesale market data buyers with similar use cases showed that some institutions are paying more than twice as much as their peers for a single index from the same provider and almost five times more for reporting licenses.
Substantive Research’s latest insights and analytics illustrate that these inconsistencies continue throughout the market data industry’s pricing, posing significant challenges for heads of market data, who need to navigate a lack of transparency around pricing and the availability of viable market data alternatives. This legacy opacity contributes to annual cost increases and complex relationships with a network of different providers. At the same time, data budgets must absorb ‘have-to-have’ benchmarks as well as market data spend.
Mike Carrodus, CEO of Substantive Research, said: “The pricing in these vital procurements is traditionally opaque and difficult to understand in context with peer procurement spend. Some providers are more inconsistent in what they charge than others, which is important to understand as this will change consumers’ strategy and approach in each case.”
Overall findings on pricing inconsistencies for the last 12 months include:
In the pricing and reference data market:
- Some providers are charging certain clients over ten times (1075%) more than other clients for similar products and services.
In the ratings market:
- The lowest to highest pricing for similar ratings products show that some providers are charging certain clients over three times more than other clients for similar products and services
- The range of increases applied with inflation as the driver is also broad here, having grown in 2021 and stabilised in 2022
The index market, updated since June 2022:
- The lowest to highest pricing for similar developed market index products show that some providers are charging certain clients 13 times (1300%) more than other clients for similar products and services
- Inflation-driven increases in pricing are applied inconsistently – and the inconsistency of percentage increases applied due to inflation become greater through 2020, 2021 and 2022
In the research & analytics market:
- The lowest to highest pricing for similar terminal products show that some providers are charging certain clients more than three and a half times more than other clients for similar products and services
- A minority of providers in this area are entirely consistent with their pricing, applying a standardised charging model in contrast to the rest of the market
Krystal Somaza, Head of Data & Analytics at Substantive Research, said, “Gaining a clear perspective of pricing in these markets has always been a challenge, given every firm’s differences in terms of its size, structure and business model, and their specific and unique use cases with each vendor. But transparency is key for procurers, where an incumbent provider base has ensured formidable pricing power in a market with limited alternatives available to buyers.”
The insights are based on the latest data generated by Substantive Research’s Market Data Spend Analytics tool which was launched in June 2022 to help long-only asset managers, wealth managers and hedge funds to compare market data payments and budgeting with the wider market and against their peers. The study captured 40 asset management firms, 60% in Europe, 40% in North America with US$5 trillion in total assets under management.
©Markets Media Europe 2022