Market Data: Times they are a changing.
Despite growing calls for the regulators to investigate the high cost of exchange data, unless something drastic happens, for now it’s fair to say these sources will continue to only be available via a very limited number of propriety venues. However across the industry, in terms of provision and access to data, times they are a changing. This can be evidenced by the growing number of buyside firms, smaller niche businesses and the banks themselves increasing their demand for more varied and flexible data sets. Whether they can afford it or not, increased pressure on the economy means that all businesses need to operate smarter by exploring alternative options and paying over the odds for ‘designer data’ is no longer viable.
So, as the ‘industry’ and the regulators clash horns over the prohibitively high price of exchange data, the new data channels are waiting in the wings ready to provide all organisations with more flexible access to competitively priced and, in some cases, hard to find data sources. By forcing down the cost of market data then the market will adjust and bring rise to a new breed of consumers who have zero tolerance for being dictated to and goaded into costly market data contracts.
Is this why some of the more progressive exchanges and brokers are already very advanced in transforming the way they provide customers with access to attractively priced, on-demand data which can be tailored to suit their specific requirements? Changing the operating model of a highly profitable, some would say unfair, status quo, which in reality may no longer be fit for purpose, is going to be a long drawn out process. *According to a recent article ‘data has become a revenue driver for the exchanges as tougher competition in trading erodes margins’. It’s no wonder there is a segment of the market who is very resistant to any change.
In these days of advanced technology, flexible licencing models and the rise of the modern workforce, change is inevitable. The ‘industry’ will continue to debate the most appropriate course of action in relation to exchange data fees and the creation of a more equitable competitive landscape and even if they reach a conclusion the lag time is years. Meanwhile, the agile, more innovative players will be quietly displacing parts of a highly lucrative monopoly the incumbent providers have enjoyed for so long. A protracted, protective delay strategy by the exchanges could prove to be counterproductive and they may find the foundations of their very comfortable world is ‘rocked’ to its core, as long-standing customers go elsewhere. Whichever way you look at it, change is inevitably gonna come.
*Source – Reuters