Market Data: Market Participants Forecast Spending Growth and Report Increased Confidence in Cloud and Artificial Intelligence

Study participants reconfirm that data quality, accuracy, and reliability stand above all other criteria when it comes to choosing market data types, frequency, and vendors. Here are three other findings from this year’s global market data study to deepen the story:

The participants in the study project that spending on market data will grow solidly over the next 12 months. Almost 60% of them anticipate a 1% to 5% increase in spending. However, when looking at different data types, growth excpectations show variations.

Higher data spending on core asset classes like equity and ETF is anticipated over the next 12 months. Likewise, index, fixed-income, and ESG data is expected to attract more budget, which, for certain participants, may increase 16% or more. Even areas where participants were less inclined to dedicate spend in 2023 – like currency trading – are likely to see more investment into market data.

Although the majority of the survey respondents continue to obtain market data via on-premises infrastructure, use of the cloud has increased substantially over the past year. Today, 50% of the study participants obtain data via a public cloud, up from 30% a year ago. The survey respondents’ belief that investment in cloud technology will pay off, is particularly acute when it comes to reaping economies of scale and being able to query large amounts of data efficiently.

The adoption of APIs is also gaining increased importance as opposed to desktop solutions and file delivery via (secure) file transfer protocol. Respondents expect them to flatline or reduce in importance over the next three to five years. This is partly due to risks associated with manual workflows, but also to the advances in partially or fully automated technologies.

This year’s study also made it clear that emerging technologies will enhance the overall provision of market data over the next two to three years. Cloud and APIs play a key role, but enthusiasm for artificial intelligence (AI) is also very robust despite the technology’s early stage of development. For instance, 75% of the survey respondents are of the opinion that AI will contribute the most to enhancing the provision and use of market data. This is an significant development considering that generative AI wasn’t even a topic of conversation a mere two years ago.

For example, survey respondents value AI as an enabler – as opposed to a replacement for an entire process. When developing investment ideas, combining AI with human decision-making is a strong focus and is likely to remain so. With that said, it is interesting that nearly half of the study participants think that AI will be used for smart automation of business processes at some point. Overall, it will require a great deal of attention and plenty of strategic thinking.