Financial data vendor

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A financial data vendor provides market data to financial firms, traders, and investors. The data distributed is collected from sources such as a stock exchange feeds, brokers and dealer desks or regulatory filings (e.g. an SEC filing).

Background

Financial data vendors have been in existence as long as financial data has been available. Financial data includes "pre-trade" such as bid/ask data necessary to price a financial instrument and post-trade data such as the last trade price and other transaction data.

Because the financial investment needed to provide the services needed, the industry had become ever more consolidated, but in 2004 it was forecast that the industry was beginning to fragment.[1]

From ticker tapes to television cameras, from databases to websites this multi billion dollar industry provides data to the trading rooms and consumers.

Industry size

According to the 2009 Burton-Taylor report, the Market Data industry exited 2009 at US$22.68 billion after closing 2008 at US$23.01 billion. In 2009, Thomson Reuters and Bloomberg market share were virtually even, at 29.4% and 29.2% respectively. The largest four financial data vendors represent the USD 15.222 billion tip of an enormous global market (2008 Annual figures [2] [3][4] [5]) and employ tens of thousands of people [6][7][8][9]

Types of data

There are many different types of instruments (including stocks, bonds, funds, options, futures, currencies, etc.) and hundreds of different markets for investment, leading to an extremely large and hard to define universe of data.[10]

The types of data offered varies by vendor, and most typically covers information about entities (companies) and instruments (shares, bonds etc.) which companies might issue. Typically, pricing data is sold separately from other related data, such as corporate actions and events, valuation information, fundamental data including company performance and reference data on the entities and instruments themselves.

In addition to market price data there are data known as market reference data, such as a ticker name, which describe securities, commodities and transactions.

Services offered

Most of the market differentiation between competitors is based on some combination of the following:

  • Delivery frequency - Data can be updated in Real-Time, Delayed, Conflated, or End of Day
  • Delivery latency - vendors offer different amounts of data latency, with lower latency typically being more expensive and more complex. An individual vendor may offer different products with different latencies.
  • Delivery method - Data is delivered either in a streaming format, or as snapshot files of streamed data, or as "end of day" files showing the position at the close of business of a certain market or region
  • Delivery transportation - Data can be delivered via Broadcast, Multicast, Satellite, Private Line, VPN, or Internet
  • Delivery format - Data can be encoded heavily to optimize performance, or can be left in simple formats to simplify databasing
  • Normalization and Data Model - Vendors collect from sources all around the world and then translates all of those formats into a single format (by vendor or by product) for consumption by either a financial data processor or by the end user. Each vendor typically has a different way of modelling financial data.
  • Reliability - High availability of data is a primary concern in the financial markets
  • Value Added Services - Data value can be improved by adding on related services such as listing information, share data, fundamental data, time series, historical data, etc.
  • Local experience - Larger data vendors have sales and service offices and data centers worldwide in major financial centers in the US, Europe and Asia. This allows their customers to access local expertise without having to have a local presence.

Global nature

Many vendors began as local companies, serving their own local markets. However, through merger and acquisition[11] and in response to the increasing globalisation of world markets, vendors now describe themselves as global.

Professional certification

The industry is largely a hidden one - both to the general public and even to some extent to its users. To begin to overcome this, in 2010, The Software and Information Industry Association introduced its Professional Certification Qualification through its Financial Services Division. By July 2011 124 professionals had passed the examination required to receive certification [12]

List of financial data vendors

References

  1. ↑ Delaney AP. (2004). The end of the age of the Big Vendors? The Handbook of World Stock, Derivative and Commodity Exchanges.
  2. ↑ http://biz.yahoo.com/ic/40/40671.html
  3. ↑ http://ar.thomsonreuters.com/financial.htm
  4. ↑ http://www.interactivedata.com/investorrelations/online_annual_report/2008/financial-highlights-2.html
  5. ↑ http://www.six-group.com/download/publications/annual_reports/2008/six_group_financial_information_business_field_en.pdf
  6. ↑ http://www.six-group.com/organisation_en.html
  7. ↑ http://thomsonreuters.com/about/
  8. ↑ http://about.bloomberg.com/company.html
  9. ↑ http://www.interactivedata.com/index.php/company
  10. ↑ Anderson D. (2005). The market data 'industry' 2005. ''The Handbook of World Stock, Derivative and Commodity Exchanges.
  11. ↑ http://www.finextra.com/fullstory.asp?id=17160
  12. ↑ http://www.siia.net/fisdpc/
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