Karim heads the Securities and Data Management team at Societe Generale Global Solution Centre (SG GSC) India. With over 16 years of experience in the Capital Markets industry across prime brokerage, client valuations, structured products, pricing and risk modeling across asset classes, he has worked with Goldman Sachs, UBS, BNP Paribas and Barclays, before joining Societe Generale in 2014.
From share prices being published on a 10-by-4 sheet of paper twice a week in 17th century London to the current instant access of global indices at fingertips – technology has transformed the speed, accessibility and accuracy with which market data is delivered. Market data technologies now provide scalable solutions to manage incoming and stored reference data for trading, accounting, risk management and reporting to investors and regulators.
With increasing complexities and diverse delivery needs, the focus on tech innovation has strengthened over the years to meet the growing demand and timeline pressure from clients, while maintaining cost effectiveness.
Key growth drivers for Market Data
The growth in demand for market data is driven by many factors. Technology remaining at the center, increased regulatory reporting in Big Data, analytics and models, multi-platform, multi-client requirements across industries and geographies in portfolio valuation, client reporting, instrument value estimation and calculations have spurted the demand from all corners.
Markets in Financial Instruments Directive 2 (MiFID2), a European regulation that increases the transparency (pre and post trade) across EU financial markets, and International Organisation of Securities Commissions (IOSCO), an association that regulates securities and futures markets globally, principles have impacted the market data needs.
While entry of large retail investors is creating a sizable consumer base for market data, in addition to the traditional consumption made by institutional investors and investment banks. Business intelligence and financial market intelligence have also shown increasing the demand for market data.
Despite the growing demand, market data vendors are oligopolistic, highly priced, non-negotiable for customised usage and often face issues with unavailability of data related information from a single source. Technology and infrastructure attachment make it challenging to procure and switch between Market Data Systems (MDS) vendors. Major MDS vendors reserve the right to audit the usage of terms and contract management. Supervision of terms and conditions usage internally complying with contractual norms is complex at times and involves financial implication.
Companies never own the data but buy defined usage rights from market data service providers, considering the high cost it involves. External redistribution is strictly limited and requires specifics contract agreements.
Storage of market data
With insurgence of cloud adoption, storage of market data is no more a problem. Smaller MDS vendors that are agile with low-cost offerings have entered the market through innovative cloud technology, providing infinite storage and computing access like large firms.
Traditional market data companies spend 90% of their budget to maintain data infrastructure and 10% on innovation and product improvement. With cloud storage, spending on innovation and delivery technology will be more.
Cloud storage enables the reach to wider customers and provides access huge databases, without compromising data and service quality. It also enables high level customization, data modelling, analytics and user-defined solutions, creating a two-way interaction in consumption of market data. MDS vendors also offer content specialisation for niche usage and large institutions.
From financial services perspective, key aspects in market data is to control the cost and usage, build capability to manage business processes, create solution scalability and stay relevant on technology. In addition to increase capability to administrate external clients, centralize information sharing and distribute market data to decouple the data source from the final customer.