Market data matters to businesses in many industries. Your people need trusted market data to make decisions, manage risk, stay compliant, and keep an edge. But market data licenses are also expensive. So the data is essential, and so is managing it well.
The problem is that managing market data is hard. In this article, we look at why market data matters, and why licenses and subscriptions are so hard to keep under control. Then we lay out a way to improve market data management and oversight while cutting costs.
A Necessary but Significant Expense
Typical users of market data include people who work in:
- Banking
- Trading
- Research
- Analytics
- Financing
- Risk management
- Accounting
- Independent price verification
- Regulatory reporting groups
- Model development and stress testing
The need for good market data keeps growing as firms run more of their work on data. Market data analytics keeps getting more detailed, and AI often powers it.
Then there is the cost. Licenses from the biggest vendors cost thousands of dollars per user per month. Scale that up across hundreds or thousands of users, and you quickly reach several million dollars a year.
Constantly Moving Target
Market data costs are not just high. They also shift. Each of the users above needs different data and a different level of detail, often very different.
Needs change too. Someone may stop needing a service after a change in role. People leave, and teams get reorganized.
On top of that, market data contracts usually renew automatically. Cancelling mid-term can mean expensive penalties, if you can cancel at all.
Why Market Data Management Is So Difficult
With spending this big and this complex, controlling costs matters. But it is very hard to do.
The main reason is a lack of oversight. Most firms have very little idea which licenses are used, where, and how much. Finding out by hand, for example by surveying users, takes a long time. It almost always gives you an incomplete and wrong picture.
Part of the reason is how licenses get bought. Buying, managing, and handing out market data licenses is often spread out, ad hoc, and largely uncontrolled. In practice, teams buy their own licenses, often from different vendors, with no shared plan.
All of this drives up costs and makes management harder. If this sounds familiar, you are not alone.
And that is before you look at data consistency problems, which cause operational and regulatory trouble. Or the compliance issues that come up if clients are charged for licenses that are barely used.
Market Data Management Objectives
To fix these problems, start by setting your goals. They should include:
- Running market data licenses and buying decisions from one place, including choosing vendors and negotiating contracts. When decisions are made in one place, you have more leverage with vendors.
- Making sure every license fits the person who has it. Cut duplicate and unused subscriptions, and fix the ones that are barely used. This will cut market data costs.
Steps to reach these goals include:
- Finding out how licenses are used today
- Moving users to cheaper sources of market data, where it makes sense
- Getting more out of the licenses you already have
- Giving duplicate and unused licenses to people who need them
- Cancelling duplicate and unused licenses nobody needs
The big question is how. You need two things: real usage data, and someone who knows what to do with it.
Getting the Facts
To reach these goals, you need one full, accurate view of the market data licenses in your company. That includes how each one is used.
This is what we do at WatchPoint Finance. We are market data consultants. We review your contracts, then use our own tools to measure how your licenses are really used. Your users won't notice. The tools run in the background with no impact on their work.
Then we turn what we find into a report. It shows where you stand and where you can improve cost, operations, and compliance. It tells you which licenses to cancel, which barely used licenses to fix, and where a cheaper option will do the job. It also shows where clients might be billed wrongly, so you can fix that too.
Transforming Market Data Management
The answer to better market data management is facts. That means knowing how people actually use the licenses they have. Get those facts, cut costs where you can, and you end up with a setup that fits your company. Every license goes where it adds the most value, with a full audit trail.
Want to know where you stand? Talk to us about a review.
