While many financial institutions have been reaping the benefits of a market data inventory system for several years, there are still some firms who continue battling overly-complex spreadsheets, spending many man-hours reconciling invoices and trying to control the cost of market data, without realizing the benefits such a platform can bring.
In a recent independent survey commissioned by TRG, we asked market data managers – in the US and UK across buy- and sell-side firms – how the use of a market data platform benefited them in their jobs. The full findings are available in our white paper, but six clear benefits emerged:
Benefit No 1: Transparency into Costs
Market data managers agreed 100% that the Number 1 benefit of a market data inventory platform is the visibility it gives you into your market data services and costs across the enterprise. All market data managers interviewed said such visibility was a significant benefit, which enabled them to better predict ongoing costs and to make informed decisions about services.
Benefit No 2: Control of Costs
Financial institutions, which are in an increasingly competitive and heavily regulated environment, are facing ongoing pressure to reduce costs. The cost of market data represents significant overhead. Through the visibility that a market data inventory platform provides, market data managers are able to identify any overlap of data or services or services that are no longer in use (see Benefit No 3), and leverage the enterprise-wide view of information services in order to negotiate better deals with their vendors (see Benefit No 6).
Indeed, 93% saw cost control as a significant benefit of such a platform, with the remaining 7% suggesting there was some benefit.
Benefit No 3: Ability to Identify Redundant Services
The ability to identify redundant data services, identified by 93% of market data managers as a significant benefit, ties in closely with the ability to control costs. An inventory platform provides a means to automate the process of researching usage and satisfaction amongst your end users through surveys where the results can highlight services that aren’t being used or valued. They can also tie into HR systems so market data managers are aware of employee changes and so can better manage changes to their subscriptions.
Benefit No 4: Improved management efficiency
Sixty percent of market data managers pointed to improved management efficiency as a significant benefit (33% saw some benefit) from use of an inventory platform. The efficiencies come through the use of a single repository of all market data service information and the automation of many previously resource-intensive processes.
Because a market data inventory platform provides a central repository to store information about all your vendor relationships, product information, contractual terms, soft commissions, a catalogue of services used by each employee for cost allocation, full audit trail, and more, it provides a single scalable source of information related to all your market data services across the enterprise.
Market data managers can then use the budgeting, analytics and reporting capabilities that sit on top of the platform’s repository to get an enterprise-wide view of the services they are using, which enables them to make more informed decisions.
Without a market data inventory platform, managers often find themselves with complex spreadsheets that are very hard to manage and a manual invoice reconciliation process that consumes significant management time and makes the decision-making process harder.
Benefit No 5: Ability to negotiate better with vendors based on enterprise use
When you can roll up all the usage of each vendor’s services, market data managers often find that there are multiple licenses for the same service, or wider-spread use of a particular vendor than was previously realized. A third of market data managers identified significant benefit (and two thirds identified some benefit) in being able to negotiate more favorable terms with suppliers upon contract renewal, based on such knowledge gleaned from use of an inventory platform.
Benefit No 6: Compliance with service provider contracts
Because all the contractual terms are stored electronically, it is very easy to review and compare usage to those terms to ensure you are in compliance with vendor policies. Thirty-six percent of market data managers saw this as a significant benefit (and 50% saw some benefit) in using an inventory platform to track and compliance, thereby avoiding the risk of failing an exchange or vendor audit and the resultant penalties that might occur.
What to do next
If you’re finding you spend too long trying to track services or reconcile invoices and your spreadsheets are spiraling out of control, consider implementing market data inventory platform (read more about how they work here). Market data managers interviewed said that the investment in a platform is more than returned in the efficiencies and costs that can be saved when you gain control over your market data inventory.
To read the full results of the market data survey, download our white paper here.