Cia Fatemi, Global Head of Sales, Market Data Services, Transaction Network Services
In today’s fast-moving, data-driven markets, financial firms are under increasing pressure to optimize every dollar spent, especially when it comes to market data. With trading environments becoming more complex and real-time analytics now essential for decision-making, data costs have surged to the top of the industry’s watchlist.
A recent JP Morgan survey confirms this trend: 16% of respondents named market data and costs as their number one market structure concern, and nearly 20% placed it second. Simultaneously real-time data and analytics were cited as the most valued feature for traders, across all product categories and regions. With market data costs of such concern, why are so many financial trading firms continuing to pay for redundant or underutilized data?
Rising Market Data Complexity
Market data costs vary widely, depending on the size of the financial institution, the number of users and the markets in which they operate. Also, global exchanges charge different rates, with market data in the US the most expensive. Financial firms need to be extremely vigilant that they are not paying for data subscriptions that they don’t use.
For firms, especially those with large teams, these inefficiencies can add up to hundreds of thousands of dollars per year. The root cause is often a lack of visibility of their market data consumption. By implementing real-time usage monitoring tools, firms can gain greater insight into their data needs and make more informed decisions about which subscriptions to maintain or eliminate.
Increasing trading environment complexity and rising market data costs has led many financial institutions to work with a specialist Market Data as a Service (MDaaS) provider to audit data consumption. These audits not only uncover inefficiencies but also help ensure that internal data strategies are cost-effective and operationally efficient. By aligning actual usage with licensing and subscription costs, firms can cut out unnecessary spending while still providing traders and analysts with the data they need. Such audits reveal where resources are being overspent or underutilized, and help firms pay only for the feeds they need.
Smarter Market Delivery Through Shared Infrastructure
The cost of building and maintaining the core components of trading infrastructure can be prohibitive for even the largest financial institutions. Additionally, market data infrastructure requires continuous upgrades to keep pace with trading demands. Rather than leasing full racks in exchange colocation facilities or buying costly cross-connects to the matching engine, firms can take advantage of shared access to multicast data feeds – the essential streams that power trading decisions.
A cost-effective alternative is an operational expenditure model, which eliminates the need for large upfront investments. Instead of purchasing servers outright, firms can scale their infrastructure as needed. With this subscription-based approach, firms pay a predictable fixed monthly fee for infrastructure management.
Traders need reliable connectivity and market data feeds to drive their trading. Companies such as TNS specialize in building shared networks and colocation footprints, offering trading firms on-demand access to both data and trading connectivity. By using these shared infrastructure services, firms gain access to advanced technology and expertise, at a fraction of the cost of managing it themselves and without compromising performance. Partnering with a specialist allows firms to lease only the space and connectivity they need, tapping into a global network, wherever they want to trade.
Future Optimisation
As markets evolve, so must financial firms’ approach to market data cost management. The industry is evolving towards agile, subscription-based models that enable firms to adjust their data consumption dynamically in response to real-time needs. By leveraging managed services, firms can potentially achieve significant cost savings and enhance operational flexibility. These strategies help to ensure that market data remains an asset rather than a financial burden, allowing institutions to reinvest savings in core business functions and innovation.
