Hong Kong, 04 October 2023 – Quinlan & Associates, in partnership with DataBP, has released an in-depth thought leadership paper that explores the potential of cloud adoption in the monetisation of financial market data.

The report, titled, Reclaiming the Market Data Value Chain: Leveraging the Cloud to Optimise Distribution and Product Innovation, illustrates current challenges faced by financial market data providers and vendors, the impact of cloud adoption, and the strategic, financial, and operational considerations for effective data monetisation.

The demand for financial market data is increasing at a rapid rate, with total industry spend growing at a robust CAGR of 5.4% since 2013, reaching ~USD 45 billion by the end of 2022. And with this rise in demand, we have seen a proliferation of service companies, a diversification of distribution models, and the emergence of specialised data vendors.

Traditionally, data providers would distribute their data directly to customers or, more commonly, rely on a suite of global data vendors. “While data providers maintain direct distribution arrangements with their most significant clients, 84% of global market data revenue is captured by vendors,” commented Benjamin Quinlan, CEO & Managing Partner at Quinlan & Associates.

Both the direct distribution and indirect distribution models have distinct benefits and limitations. Direct distribution offers greater flexibility, along with a reduced time-to-market, but can create a highly fragmented consumer experience. In contrast, indirect distribution offers the convenience of a single feed of data but often in bundled data sets that lack flexibility. The dependency on data vendors can also reduce the velocity at which data providers can launch new products, restricting their ability to innovate and diversify, whilst also increasing the risk of non-compliance. In some cases, data providers have acquired data vendors to bridge the gaps, but this comes at a high cost.

“We believe cloud presents an opportunity to deliver the best of both worlds,” said Mark Schaedel, CEO of DataBP.

“Public cloud adoption provides greater distribution and commercial flexibility and a chance to hit reset on the end-user relationship with modern distribution models. It enables more direct distribution capabilities, providing total flexibility in product creation, along with more dynamic packaging and more responsive control. Cloud can also offer additional advantages such as operational efficiencies, infrastructure modernisation, and scalability. The increasing relevance of A.I. and the appetite to improve intellectual property (“IP”) protection through strategies such as digital rights management further underscore the opportunities presented by cloud technologies,” continued Mr Schaedel.

“The potential of this new approach reduces the barriers to entry for smaller and alternative data vendors, activating the ‘long tail’ of providers through a cloud-based management framework that replaces the legacy ‘trust’ model with automation and technology, whilst reducing exposure to the traditional operational and commercial risks of operating as a vendor,” added Mr Quinlan.