Record market data spend 💰 highlights need to track costs
Spending on financial market data rose almost 6 percent to a new record of more than $33 billion (2020), according to an annual report by Burton-Taylor Consulting, and expected to grow strongly.
(EDIT: market data spending increased 7.4% to 35.6 billion in 2021 and two in three survey respondents to Burton-Taylor’s annual market data survey estimate industry growth in 2022 to be greater than the 5-year average of 4.6%.)
“This makes data one of the biggest costs facing financial institutions.”
Market volatility during the pandemic fueled increased data demand while a shift to remote working led to an uplift in the number of licenses required, potentially making it harder to track compliance with vendor contracts.
Industry insiders say the cost per license rose sharply in 2020, above the 2-5 percent norm 📈
Alternative data is a growth area, expanding the variety and complexity of sources to be managed. Nearly two-thirds of respondents to a separate Burton-Taylor survey said they expected to increase alt-data spending.
These factors are putting pressure on firms large and small, to optimize their spend on and their usage of both data and information.
But optimization is more than just cost cutting. It requires clarity on spend, usage, compliance and data enquiries, among many other factors across the lifecycle of a market data subscription.
For the data manager, the goal is optimum visibility of the data landscape.
This should cut the time spent on spreadsheets, leaving more for higher-value tasks such as ensuring users have only the best and most relevant data.
It can also lead to potential savings of 10-30 percent in the first year.