Market data is essential in finance, but market data subscriptions are also a big cost. Managing market data vendors is complex too, especially in large companies with many kinds of users. How can you control costs without giving up data quality, team performance, or business priorities?
With the right facts and the right help, you can get market data vendors under control in five steps.
Step 1: Understand Your Current Position
Start by finding out which vendors your company uses and how much you spend with each. This tells you your total spend on market data subscriptions and licenses.
Review your vendor contracts at this stage too. Renegotiating and changing subscriptions is a big part of managing market data vendors well, so you need to know your renewal dates and notice periods.
Step 2: Audit Current Subscriptions and Spending
Knowing what you spend, and where, is not enough. You also need to know how your market data licenses and subscriptions are being used.
This is where it gets hard, especially if you audit by hand. Manual audits take a long time, have errors, reflect people's biases, and rarely cover everything.
The only real option is to measure usage automatically. That's how we do it at WatchPoint Finance.
With measured usage, you get a full and accurate picture of which subscriptions are used, where, and how. Then you can:
- Compare what users need with what their subscriptions can do.
- Find gaps between what users seem to need and what they actually use. Do you have subscriptions only because you think you need them, even though they are barely used?
- Check how costs are charged to clients, portfolios, and business strategies.
- Find subscriptions that aren't worth it because they are barely used or not used at all. Both are wasted spend, and they add compliance risk.
- Find duplicate subscriptions.
Step 3: Cost Optimization
Once you know what you spend with each market data vendor, you can start improving your position to reduce costs. This includes:
- Cancelling unused and duplicate subscriptions, or giving them to someone who needs them.
- Moving barely used subscriptions to cheaper options. For example, a barely used terminal can often be replaced by a cheaper platform. Sharing terminals can also cut costs with no loss of data quality.
- Working out whether changing vendors would save money.
- Using fewer vendors where you can, so there is less to manage and more leverage when you negotiate.
Step 4: Negotiate Contracts
Accurate usage data is the most important part of cutting market data costs. Good contracts help too. Best practices include:
- Don't just let contracts roll over at renewal. Always review them to see where terms and pricing can be better.
- Use your buying power to get the best deal.
- Choose flexible contracts. Market data needs change all the time as people, teams, and client contracts change. The more flexibility you build in, the easier it is to match your subscriptions to what the business needs.
- Use renewal talks to move the right subscriptions to cheaper vendors.
Step 5: Continuous Management
Managing market data vendors is not a one-time job. The first round brings the biggest savings, because that is when you have the least visibility and control. Once you can see what is going on and have made a first round of changes, later gains will be smaller.
But ongoing management still matters for two reasons. It keeps costs down, and it stops your subscriptions from drifting back into a mess.
That means staying on top of vendor contracts and reviewing them often. It also means checking what people need and measuring usage on a regular basis.
The Right Help: WatchPoint Finance
These five steps give you a clear plan for managing market data vendors and cutting costs. To make them work, you need accurate usage data and people who know the market data business.
This is where we come in. WatchPoint Finance is a market data consultancy. We review your contracts, measure how your subscriptions are really used, and show you what to cut and which alternatives fit. Then we help you make the changes.
If this sounds useful, get in touch and we'll talk through where you stand.
