1.1 Gazing towards the Future: Thoughts and Observations

Welcome to our very first post.

1.1 GAZING TOWARDS THE FUTURE: THOUGHTS AND OBSERVATIONS

Where are the financial information/market data industry and the businesses which service it, going? Almost certainly in more directions than we are discussing and reviewing here. So, we must first identify and then address the key issues which drive dollar-based decisions for providing and sourcing information.

The industry is changing in a myriad of ways, but there seem to be both factors and trends which are linked but not obviously, completely intertwined.

There are 5 base market data industry elements crucial to its understanding.

  1. Original Content. Ability to access the accurate, consistent and timely data provides market-moving advantages to the end user. This is of increasing concern to regulators.
  2. Sourcing Content. Ability to source the best data means knowing what is available and where to get it, either directly, or via an aggregator. While a lot of market data (such as from Exchanges) have only one source, the OTC markets have multiple potential sources, all subtly but importantly different. Effective sourcing strategies deliver better decision-making market data.
  3. Delivering Content. Technological advancement is an enabler by providing access to a wider range of data, and increasing its usage across enterprises flexibly and efficiently. Cloud Technology is already acting as an accelerator and is well on the way to becoming the most important strategic business dynamic for information providers and information consumers.
  4. Cost and Ownership. Different market data sets have different values, and this is inextricably linked to ownership and the contractual rights to use the market data in permitted ways. In many ways, it is the foundation of the industry, but suffers from being misunderstood in both concept and application.
  5. Market Data Utilisation. New markets and financial instruments drive demand, better technology brings increased flexibility. This means market data is being used in vastly more ways and for more purposes than imagined only a few years ago

Each of these elements is in a state of flux which poses challenges and opportunities for all the players currently participating in the market data industry, and opening up doors for new entrants.

Existing leading companies, such as Bloomberg and Thomson Reuters, have significant advantages which make them powerful competitors, but they, like their fellow vendors, face internal challenges and a new breed of innovative market entrants with formidable resources.

There are global changes happening to the market data industry affecting the exchanges, OTC markets, technology providers and the end users – financial institutions, as well as retail investors. What are they?

Do exchanges, vendors and users understand how their businesses are changing and are they prepared for change?

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