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.
