This is the 7th edition of our industry newsletter with musings, observations and ideas regarding the challenges and opportunities facing market data management leaders.
It has long been a source of debate over who should really own it. Some firms push all market data buying through procurement. Others keep procurement focused on the largest contracts and leave the rest to market data teams or even the front office. And some procurement teams would happily manage any other category before they take on market data, preferring to leave it with specialists in the business units.
Why such inconsistency? Because market data is the ultimate square peg: a cost line that refuses to fit neatly into the standard procurement round hole. Just as there’s no single definition of market data, there’s no single model for managing it.
Let’s explore why and how market data buyers and procurement teams can partner to manage this reality effectively.
Is a Bloomberg terminal market data? Yes. Is the feed of index constituents from MSCI or S&P? Absolutely. But what about research products, news feeds or the platforms that monitor front-office activity such as OMS or risk/compliance systems? They consume market data alongside other datasets, but is the technology itself in scope? And finally, what about client data – essential for KYC processes – where does that fit? These are the kinds of questions that come up regularly in mature market data management organizations.
The blurred line between data and infrastructure creates confusion internally and weakens procurement’s ability to apply a consistent framework.
In most categories, spending decisions are centralized and relatively straightforward to manage. Not so with market data.
Requests come from the front office, people whose job is to move quickly and seize opportunities. They expect fast access to the data they need, and that urgency puts pressure on approval processes.
Those requests may still go through a workflow but challenging them isn’t simple. The outcome is a spend profile that is harder to control, predict or influence than other categories.
We know firsthand that even firms with strong procurement discipline see double-digit annual increases in their market data bill, with some reporting renewal cost increases approaching 50%. That’s not even overspend, it’s the normal cost curve. The nature of the category.
Demand for new data keeps rising. Supply is concentrated among a handful of providers, and many services are non-negotiable - and not subject to competitive pressure. When products or funds are tied to a benchmark, changing providers is extremely difficult. And while compliance may only require support from two ratings agencies, in practice there are just three truly global players.
In this environment, leverage is stacked in the vendor’s favor. Even the best negotiators can only do so much, and the fundamental message of “if you want costs to drop, reduce people, or activities, or both” is deeply unpopular within the business units using the data.
Signing the contract is the simple part. What comes after is far harder.
Each license is effectively a rental agreement, with detailed rules about who can use the data, what can be done with it, how it can be shared and what’s off-limits. Breaches can trigger major penalties - these can be financial, but perhaps more worryingly lead to an immediate suspension of service and potential termination - especially in regulated environments.
Not surprisingly, traditional IT vendor and asset management systems or spreadsheets easily capture that nuance, which leaves firms exposed.
A procurement professional who also understands the intricacies of market data is a rare find.
Many are handed responsibility alongside other categories and try to apply a generic playbook; often without the tools or institutional knowledge to manage it properly.
The result? Missed savings opportunities, compliance risks and more leverage to vendors who understand the complexity better than their clients do.
Buying decisions by users are often so dynamic and individual, with lack of big-picture understanding of the cost implications.
This creates a real challenge when trying to put cost control systems in place. How can you influence this, properly allocate costs, and optimize the behavior in flight or after the fact?
It means you essentially need to be all-seeing in regard to contracts, what you have bought, where you bought it and how to rationalize it. The key is to try to influence behavior with purchasing gates and transparency up and down the usage chain.
For procurement, it’s like constantly trying to bring order to something inherently unruly, only to be left rationalizing the bill after the fact.
Where does this leave procurement and their partners in market data management?
Market data will never behave like a standard category. It’s complex, user-driven and vendor-weighted by design. That’s why the usual procurement playbook falls short.
When procurement and market data work in tandem – with the right systems, shared insights and mutual trust – firms can bring a greater degree of control to one of the toughest spend categories.
If market data will never play by the usual rules, how can you rewrite the playbook in your organization?