Market data license costs can spiral when there is a lack of centralized management. The complexity of product usage, vendor contracts, and license allocation in enterprise organizations makes centralized management challenging without an advanced market data management solution.

In this blog, we will outline the key components you should look for in a market data management solution.

This will help you choose a platform that will ensure cost transparency. You will also be able to reduce costs in the first instance before then exercising greater cost controls over the long term. Compliance is another area where you will see improvements, and you will be in a better position to negotiate the best deals with market data vendors.

 

The Three Objectives of Market Data Management

Defining your objectives is a good starting point when assessing market data management solutions. In most situations, there are three main objectives:

• Cost optimization – reducing costs without impacting data quality.
• Usage optimization – ensuring users have the data they need and that all licenses are properly utilized.
• Compliance – compliance with industry regulations and market data vendor terms.

 

Market Data Management Solutions: Key Components

• Automated, real-time data collection
• AI-powered analysis
• Post-analysis support
• Cost and ROI

 

Automated, Real-Time Data Collection

The platform and service you select should have the ability to collect market data license, inventory, and usage stats without interrupting users or day-to-day operations.

Crucially, the data should be automatically collected rather than obtained through manual methods (such as user surveys). The data should also be complete, accurate, and centrally held for comprehensive analysis.

The best market data management solutions will facilitate the real-time tracking of consumption at both the user and application levels. The aim is to get a full picture of:

• Who – who is using what service
• What – what is the product and license they are using
• How – how they are using the service and how often

Accurate and complete data is only one piece of the puzzle, as how that data is used is also crucial.

 

AI-Powered Analysis

The user and product consumption data should be analyzed, ideally using AI-powered technologies, to identify areas for cost, usage, and compliance improvements. This analysis and the recommendations produced must align with the needs of the business and the requirements of users.

The data should also be presented in actionable and value-adding reports and dashboards.

Key outcomes include:

 

Right-Fit License Allocation

Optimizing costs involves ensuring that right-fit market data licenses are assigned to business units, cost centers, and/or projects. This reduces costs as well as enhances accountability and encourages cost-conscious behavior across the organization.

The market data management solution you select should validate whenever products and licenses are right-fit, and it should identify areas where changes can be made. This can include, for example, consolidating licenses or moving users from Bloomberg terminal to an alternative provider.

 

Benchmarking

It is beneficial to establish a benchmark to analyze usage, cost, and compliance trends over time, and to assess spend against internal targets or peer company averages.

 

Compliance

Essential compliance outcomes include:

• Ensuring users are only accessing data and services they are authorized to access as part of the relevant license. This is in addition to ensuring compliance with market data vendor contract terms, such as data usage limits for API feeds.
• Ensuring the licenses assigned to client accounts are the right fit. The aim is to prevent clients from being overbilled for unused or under-utilized licenses.
• Access to data that enhances netting management while maintaining compliance with vendor contracts and terms. Netting management is where you reduce market data costs by ensuring you only pay for data once when an employee accesses that data on different platforms or devices.
• The availability of audit-ready reporting both for vendors and industry regulators.

 

Post Analysis Support

Once the data is collected and analyzed, and areas for improvement and optimization are identified, the next step is to implement the recommendations. The market data management solution you select should include robust processes for approving, retaining, amending, or terminating data subscriptions.

 

Cost and ROI

Cost is always a factor when selecting any software platform or service. Achieving a healthy ROI should be the main goal.

At WatchPoint Finance, we make this as simple as possible by directly connecting the price you pay with the amount of money you save. Read more about our pay-per-saving pricing model.

 

The True Value of Data is in its Management

Market data is no longer just an unavoidable cost of doing business. Instead, it is a critical, high-value asset that calls for a shift in approach from the simple processing of vendor bills to proactive license and usage management.

The right Market Data Management solution will give you granular visibility into everything from Bloomberg terminal usage to compliance risk, transforming your data function from a cost center to a strategic lever.

You will reduce costs, gain negotiating power, ensure compliance, and give your teams the exact data they need, when they need it.

We can help at WatchPoint Finance with our best-in-class Market Data Management solution. Start commanding your data strategy – book a demo today.

Market data is essential in the financial sector, but market data subscriptions also represent a significant cost. The management of market data vendors and subscriptions is also highly complex, especially in large organizations with diverse workforces. How can you manage and control costs without sacrificing data quality, team performance, or business priorities?

With the right tools and support, you can optimize market data vendor management in just five steps.

 

Step 1 – Understand Your Current Position

The starting point is to get a handle on which vendors your organization currently uses and how much you currently spend with them. This will tell you the total spend on market data subscriptions and licences.

It’s also beneficial at this stage to review the contracts you have in place with vendors, as renegotiating and changing subscriptions is an important part of optimizing market data vendor management.

 

Step 2 – Audit Current Subscriptions and Spending

While it’s important to know how much you are spending and where, it’s not enough. You also need to understand how your market data licenses and subscriptions are being used.

This is where things can get complex, particularly when conducting a manual audit. Manual audits are time-consuming, prone to error, subject to human biases, and rarely comprehensive.

The only viable option is to use automated data capture and analysis technologies, such as our solution at WatchPoint Finance.

With automated data capture, you will get a full and accurate picture of what subscriptions are being used, where they are being used, and how they are being used. You can then use this information to:

• Compare the needs of users with the capabilities of subscriptions.
• Identify gaps between perceived user need and actual utilization, i.e., are subscriptions in place because we think we need them even though they are under-utilized.
• Assess how costs are being allocated to clients, portfolios, and business strategies.
• Identify subscriptions that are not delivering value because they are being underused or not used at all. Both underused and unused subscriptions are wasted spend, but they also increase compliance risks.
• Uncover duplicate subscriptions.

 

Step 3 – Cost Optimization

When you have an understanding of what you are spending with each market data vendor, you can start optimizing your position to reduce costs. This includes:

• Cancelling or reallocating unused and duplicate subscriptions.
• Changing underused subscriptions to lower-cost alternatives. For example, underused market data terminal subscriptions can potentially be replaced by consolidated platforms. Terminal sharing can also reduce subscription costs with no impact on data quality.
• Analyzing the cost benefits of changing to a different vendor.
• Consolidating vendors where possible to reduce management complexity and enhance negotiation power.

 

Step 4 – Negotiate Contracts

Getting access to accurate usage data is the most important part of reducing market data subscription costs. That said, negotiating favorable contracts is also beneficial. Best practices include:

• Don’t just let contracts roll on when up for renewal. It’s always best to review market data vendor contracts to identify areas where terms and pricing can be improved.
• Leverage your buying power to get the best possible deal.
• Prioritize contract structures that offer flexibility. After all, requirements for market data subscriptions are highly fluid as personnel, teams, and commercial contracts change. Building in as much flexibility as you can makes it possible to make adjustments to more closely match your subscriptions to business requirements.
• Use contract renewal negotiations to switch suitable subscriptions to lower-cost vendors.

 

Step 5 – Continuous Management

Optimizing market data vendor management is not a one-time event. It is true that now is the time when you can make the greatest cost reductions and efficiency savings, i.e., the biggest savings can be made when you have the least visibility and control. Once you have visibility and control, and you have made an initial round of adjustments, future improvements will be more incremental.

However, continuous management is important on two fronts – to ensure costs are always optimized and to prevent the management of market data subscriptions from drifting back to challenging complexity.

Continuous management involves staying on top of vendor contracts and keeping them under review. It also includes regularly analyzing requirements and capturing usage data.

 

The Right Tools and Support – WatchPoint

The five steps described above outline a clear roadmap to optimizing market data vendor management and reducing subscription costs. To make the steps work, you need accurate, reliable, and comprehensive usage data, in addition to expert support.

This is where we come in at WatchPoint Finance. Our industry-leading software captures subscription usage data in real-time without interrupting teams or disrupting day-to-day operations. We’ll then use that usage data to provide advice and recommendations on how to optimize your subscriptions and reduce costs. Plus, our pricing model means we only charge fees when we save you money.

If this sounds like something your organization could benefit from, get in touch, and we’ll arrange a demo to show you how it works.

Market data subscriptions, including Bloomberg Terminal subscriptions, are expensive. As a few thousand subscriptions result in annual costs measured in the tens of millions, even a market data cost reduction of a few percent can have a significant impact.

From our experience, savings of a few percent are at the lower end of expectations. Once you identify licenses that are not being used, duplicated, or underutilized, the savings you can make ramp up. And you can then factor in additional savings that can be made by switching some users to lower-cost market data alternatives.

It all sounds great, i.e., there are savings to be made, and that money is much better staying within your organization than being hemorrhaged to market data vendors.

Finding the savings, however, is incredibly complex. That’s where you need a solution like the software we provide at WatchPoint Finance.

 

The WatchPoint Finance Difference

There are other companies that also offer market data cost reduction solutions. Not as good as ours, of course, but there are alternatives.

One of the key differences between our offering and the way our competitors operate is our extensive experience in the financial sector. We are an automation and AI software development company that has deep roots in the financial services industry. We work with global financial services companies, and we have a comprehensive understanding of the technical challenges, employee nuances, and compliance issues that are commonplace.

Another main difference between the WatchPoint Finance market data cost reduction solution and others in the market is our pricing model. We operate on a Pay-Per-Saving (PPS) basis.

 

How Does a Pay-Per-Saving Market Data Cost Reduction Solution Work?

It couldn’t be simpler, really. Let’s start with what we don’t charge for.

We don’t charge setup fees, per-analysis consultancy fees, or fees for producing a report outlining where you can make market data cost savings.

We only charge you when we save you money. All the above things are part of what we do, but you only incur costs from us when we actually reduce the amount of money you are currently spending on market data subscriptions. It works on a percentage basis, i.e., we charge a small percentage of the amount we have saved you.

It’s not even completely accurate to describe it as a cost, as right now, today, you are spending the money anyway. We help you stop any unnecessary market data spending and charge a small percentage of the savings for the service.

 

The Benefits of Market Data Cost Reduction

If you would like to learn more about the technical elements of our market data cost reduction solution, get in touch, and we’ll arrange a demo.

For the remainder of this blog, we are going to focus on the benefits:

• Save money – how much you will save depends on the number of subscriptions you have, how many of those subscriptions are for the highest priced products, and the extent of subscription sprawl. That said, savings of up to 20 percent can be achievable.
• Savings realised annually – the savings we help you make today are repeated every year.
• Mitigated compliance risks – charging a client for market data subscriptions that are not being used can result in compliance challenges. We can help you ensure that what you are charging clients accurately reflects the market data subscriptions that are being used.
• Maintained data quality and integrity – our goal is to identify right-fit market data solutions for your situation. This saves you money with no loss of data quality or integrity.
• License allocations based on usage – there is often little objective reasoning or oversight when it comes to market data license subscriptions. We help you move to an allocation approach based on real-world usage data.
• Enhanced visibility and control – managing market data licenses will become easier with enhanced visibility and control.

 

The Cost Saving Double

The conclusion that we would like to focus on in this blog is a cost-saving double.

You shouldn’t be paying more than what you need to for market data, especially when there is minimal understanding of how, where, and why the money is being spent.

At the same time, you shouldn’t pay anything for market data analysis unless that analysis produces real-world savings.

The WatchPoint PPS market data cost reduction solution is the best way forward.

Market data is essential for businesses in a range of industries. Ensuring users in your organization have access to trusted market data sources is important for decision-making, risk mitigation, compliance, and maintaining a competitive edge. While essential, market data licenses are also expensive. Therefore, not only is market data essential, but market data management is essential too.

The problem is that market data management is challenging. In this blog, we are going to look in more detail at the importance of market data as well as the reasons why managing licenses and subscriptions is so challenging. We’ll also outline a solution – a solution that will enhance market data management and oversight while also reducing costs.

 

A Necessary but Significant Expense

Typical users of market data include those involved in:

• Banking
• Trading
• Research
• Analytics
• Financing
• Risk management
• Accounting
• Independent price verification
• Regulatory reporting groups
• Model development and stress testing

Furthermore, the need for good quality market data is only growing as business operations and structures become more digitalized and data-driven. For example, market data analytics is becoming more detailed and sophisticated, often powered by AI platforms and algorithms.

Then we come to the significant expense element, as licenses for the biggest vendors cost thousands of dollars per month per user. Scale that up across hundreds, thousands, or even tens of thousands of users, and you quickly get up to annual expenditures of several million dollars.

 

Constantly Moving Target

As well as being expensive, market data license costs are also variable. To start with, the type of market data and level of detail required by all the above types of users differ, often considerably.

Requirements also change. For example, the services previously required by a user may no longer be necessary because of a change in roles or responsibilities. People can also leave the organization, and organizational structures can change.

Compounding this is the fact that contracts with market data vendors typically renew automatically, while cancelling mid-term can result in expensive penalties, if it is even possible to cancel.

 

Why Market Data Management is So Difficult

Controlling and optimizing costs is important given the scale and complexity of the expenditure, but doing so is very difficult.

A lack of oversight is the main reason, as there is usually very little understanding of what licenses are being used, where, and to what extent. Getting this information manually (e.g., by surveying users) is time-consuming and almost always results in an incomplete and inaccurate picture.

One of the reasons for this is the fact that the purchasing, management, and distribution of market data licenses is often decentralized, ad hoc, and largely uncontrolled. In practice, this decentralized approach involves teams sourcing market data licenses individually, often from different vendors and without a joined-up data or purchasing strategy.

All these realities lead to increased costs and management inefficiencies. If this sounds familiar, you are not alone.

You then have to consider the fact that the challenges are often impossible to overcome using manual methods.

And this is all before you start looking at the data consistency problems that exist – problems that present operational and regulatory difficulties. Or the additional compliance issues that can also arise if fees for under-utilized licenses are being erroneously charged to clients.

 

Market Data Management Objectives

 

To address the issues outlined above and realise the benefits, it is important to first define the objectives. Those objectives should include:

• Centralizing market data license management and purchasing decisions, including vendor selection and contract negotiations. By centralizing management and decision-making, you will enhance your negotiating position with vendors.
• Ensuring license allocations are right-fit, with duplicated and unused subscriptions eliminated and under-utilized licenses optimized. This will cut market data costs.

Steps to help you achieve these objectives include:

• Analysing how licences are currently used
• Moving users to more cost-effective sources of market data, where it is suitable to do so
• Optimizing how you leverage existing licenses
• Transferring duplicate and unused licenses to other users
• Cancelling duplicate and unused licenses that are not needed

The big question is how. Technology and expert support are the solution.

 

Optimizing Market Data Management

To achieve the objectives and progress through the steps outlined above, you need a single, comprehensive, and accurate view of the market data licenses in your organization. This should include how those licenses are being used.

Automated technologies, such as our solution at WatchPoint Finance, can give you this detailed oversight of how your organization is using its market data licenses. Staying with the example of our solution, the data on license utilization is collected in real-time with zero impact on the productivity of your users.

That data is then used to produce a report explaining your current position and where cost, operational, and compliance improvements can be made. For example, it will highlight the licenses that should be cancelled, the under-utilized licenses that should be addressed, and areas where lower-cost options can be implemented. The report will also identify where there are client billing error risks, so they can also be rectified.

 

Transforming Market Data Management

The solution to optimizing market data management is data, i.e., data on how users utilize the licenses that have been allocated to them. By getting control of market data in your organization and cutting costs where reductions can be made, you will end up with a solution that is the right fit for your organization. In other words, licenses allocated in a way that maximizes value with full audit trail transparency. Transforming market data management is possible with this approach.