Traditional market data and excel spreadsheet models have been left behind in the third industrial revolution. The financial industry has moved into the fourth industrial revolution and market data users can now predict the future using data derived from subconscious thoughts and financial models that build themselves … not really, but close!
The finance industry is quickly adapting to a new world of data, with demand for unique and structured datasets constantly expanding as firms seek new inputs for their proprietary and outsourced models. Vendors of financial market data and analysis have invested significant sums in ongoing efforts to stay ahead of this demand to maintain their market share in the industry.
The evolving demand is resulting in record industry growth, with global spending on financial market data and analysis increasing a record 7.0% over 2018, reaching $30.5 billion. Bloomberg and Refinitiv continue to account for the largest share of the market but industry growth was driven by firms such as Moody’s Analytics, IHS Markit, S&P Global and Morningstar.
On the Right Track
Vendors have shifted their focus to provide datafeeds that meet rising user demand. A few of these strategies include:
- FactSet’s launch of FactSet Marketplace that offers financial and alternative data from third-party providers;
- ICE’s partnership with Blockstream to offer clients data from fifteen cryptocurrency exchange venues;
- IHS Markit’s launch of an alternative data set covering strategy signals in the automotive sector;
- and Bloomberg Beta’s investment in Survata, Inc., a market research company that sells consumer datasets to businesses.
Datafeed revenues, which Burton-Taylor defines to include consolidated feeds, real-time & trading datafeeds and pricing, reference & valuation data, totaled $6.6 billion in 2018, an increase of 10.4% over the year and representing the fastest growth in over five years. A combination of broader use of technology and increased regulatory focus on the fixed income and derivatives markets have supported strong growth in pricing, reference & valuation data revenues. Pricing, reference & valuation datafeeds accounted for the greatest share of total datafeed spending, reaching $5.0 billion in 2018, up 12.2% from 2017. Bloomberg and ICE remain the largest providers in the area but other vendors including FactSet, IHS Markit and Moody’s Analytics saw the fastest rate of growth.
Unlocking the Insights
The data tsunami has reinforced the need for more powerful analytical tools that can help analyze the data and provide actionable intelligence to consumers. Vendors are both building and buying technology as new methods of linkages and analysis are being introduced. S&P Global’s acquisition of Kensho and Panjiva are clear indications of this trend. Firms are also partnering with emerging fintech companies. Refinitiv partnered with AnalytixInsight, an artificial intelligence data analyzing platform and FactSet partnered with Quantopian to launch a financial data analysis platform that will allow FactSet Marketplaces’s data to be analyzed using open-sourced solutions. Management of big data sets is also a vendor focus, evidenced by Bloomberg’s launch of Enterprise Access Point, a data platform that facilitates the structuring of bulk data sets.
Spending on analytics increased 8.9% over 2018 to $6.0 billion with the demand continuing to be met in large by Bloomberg and Refinitiv who combined hold half of analytics revenue spend. Other providers such as Moody’s Analytics, FactSet and MSCI/Barra have worked to create strong analytics offerings within their solutions and maintain their market share by partnering or acquiring with the technology and talent they need to remain competitive. The leading analytic providers that will continue to stay on top are the ones that allow client customization and integrations.
As vendors continue to navigate the new data landscape, Burton-Taylor will cover the market leaders and trends. Further insights into the most recent shaping of the largest market data vendors can be found in the Burton-Taylor Financial Market Data/Analysis Global Share & Segment Sizing 2019 – Key Competitors 2014-18, Global Market Share 2014-18, Global Segment Sizing 2014-18, Global Product Mix 2014-18, Global User Mix 2014-18, Global Institution Mix 2014-18, here.
Douglas B. Taylor is the Founder of Burton-Taylor International Consulting, part of TP ICAP group, where he is responsible for its Financial Market Data/Analysis vertical, focusing on how competitive pressures are forcing shifts in business models and strategic initiatives of industry providers in the financial market data space.
Jennifer Milton is an Analyst at Burton-Taylor International Consulting, part of TP ICAP group, where she is responsible for research, analysis and report generation covering Financial Market Data/Analysis Providers and Anti-Money Laundering/Know Your Customer Data & Information Vendors.