Responsibility Without Authority
"Consumers must be able and willing to walk away and either buy elsewhere or forgo something."
Despite being generally acknowledged as the third-biggest cost for financial services firms, behind personnel and buildings, when budgets tightened in recent years, market data managers were given responsibility for slashing costs, but weren’t also given the authority to pry expensive Bloomberg terminals and other premium services from traders’ grip.
We’ve seen these kinds of challenges before: For example, just a dozen years ago, reference data professionals struggled to obtain a share of the budget and to make their voices heard in the boardroom, despite under-investment in reference data contributing to failed and broken trades—essentially undoing all the hard work that quants and engineers had done in the front office to develop sophisticated trading strategies and low-latency infrastructures.
However, once management realized that poor reference data has a measurable impact on bottom-line performance, the situation changed, and now reference data management is taken seriously, with many firms appointing a chief data officer to oversee it.
And while a chief data officer’s remit often technically covers market data, their roles are typically more concerned with data governance than data sourcing or finding ways to displace premium services with lower-cost alternatives to meet their budgets. A perennial complaint of market data professionals is that the front office—even today’s more cost- and license-conscious front office—gets what it wants, so long as it can justify higher-cost products by bringing in revenues, and that market data staff are left to meet its demands, rather than the data experts being able to use that expertise and enforce a new data strategy that might be more affordable and even more effective.
Thus, many data professionals still feel overworked and undervalued—caretakers of data rather than feeling empowered or encouraged to do anything strategic with it. And with data fees charged by exchanges and index providers especially continuing to rise, wouldn’t their firms want to leverage that expertise to the fullest extent possible?
Many data professionals still feel overworked and undervalued—caretakers of data rather than feeling empowered or encouraged to do anything strategic with it.
For example, Waters stablemate Inside Market Data recently reported on across-the-board fee increases at the Australian Securities Exchange, and the introduction of fees for the Nikkei 225 index (though Nikkei and distributor Thomson Reuters disagree on which party is charging the fees), both of which have upset data managers at banks and asset managers, some of whom say their firms may reevaluate their use of ASX and Nikkei data as a result. But the truth is that such warnings are empty threats without the backing of the front office. Unless data managers are empowered to switch off a feed or a market once it crosses a price threshold, or unless traders are willing to put their money where their mouth is and boycott a market or contract in solidarity with those forced to manage the rising data fees, nothing will change.
Zero Competition
That’s unlikely, especially in markets where there is one dominant marketplace or data source with little competition. After all, in markets where more competition exists, that competition should in theory keep prices … well, competitive, though the trend of late has been for suppliers to price services according to the highest price that the market will bear, with each provider justifying their increases by saying that others are already doing it.
And that’s not dishonest or unethical. If anything, it would be irresponsible to shareholders if a for-profit entity didn’t set its prices as high as consumers are willing to pay. But to keep any provider honest, consumers must be able and willing to walk away and either buy elsewhere or forgo something. And that means giving data managers the authority—and front-office support—to make sourcing decisions that may impact business strategy. Because after all, your third-largest expense is already having a major impact on your business strategy.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
More on Emerging Technologies
This Week: ION/LuxSE, BNY Mellon, Nasdaq, and more
A summary of the latest financial technology news.
Nasdaq to market new options strike listing tech to other exchanges
The exchange operator is experimenting with emerging technologies to determine which options strike prices belong in a crowded market, with hopes to sell the tech to its peers.
Former Goldman analyst aims to blend GenAI and synthetic data with start-up
Synthera.ai is taking a novel approach to calculating risk. While promising, industry observers are skeptical.
Waters Wavelength Podcast: Bloomberg’s Tony McManus
Tony McManus, global head of enterprise data division at Bloomberg, joins the podcast to talk about the importance of data in the context of AI and GenAI.
Devil’s Bargain: Closed architecture systems will derail AI ambitions
Rob Flatley explains why closed-off systems will fall flat when it comes to AI adoption.
This Week: First Trust/Bloomberg/New Constructs, Cboe/Metaurus, LTX/MultiLynq, and more
A summary of the latest financial technology news.
Waters Wavelength Podcast: S&P’s CTO on AI, data, and the future of datacenters
Frank Tarsillo, CTO at S&P Global Market Intelligence, joins the podcast to discuss the firm’s approach to AI, the importance of data, and what might be in store for datacenters in the coming years.
BMO’s cloud migration strategy eases AI adoption
The Canadian bank is embracing a more digital future as its cloud strategy makes gains and it looks to both traditional machine learning and generative AI for further augmentation.
Most read
- Waters Wavelength Podcast: Bloomberg’s Tony McManus
- IMD & IRD Awards 2024: All the winners
- Waters Wavelength Podcast: S&P’s CTO on AI, data, and the future of datacenters