According to Robert Iati, CEO and Managing Director of Burton-Taylor International Consulting, there is a direct link between advanced technology and the impact on data and data spending that is being made by industry.
Robert Iarty
The company announced the Financial Markets Data 2024 Kickoff Survey, the largest sample of respondents ever to the annual Burton Taylor survey.
Respondents include industry suppliers, analysts, technology providers, consultants, and users to determine market data spending estimates for 2023.
The results provide an optimistic but somewhat tempered outlook for the year ahead, with respondents suggesting that global spending will exceed historic growth rates in 2024.
According to Iati, advanced technology will have the biggest impact on market data spending.
The pace of adoption of cloud technology for data management and artificial intelligence for quantitative analysis is dominating “almost every part of the business, from trading to risk management,” he said.
“Technology is clearly the biggest driver of spending and data budgets,” Iati emphasized.
According to the survey results, only 4% of respondents said their organization is not considering AI in any part of their business.
Iati added that the study revealed that the use of AI tools and their impact on data is a bigger issue for data providers than data users.
Respondents predict that traditional market data providers will face challenges to their businesses due to rapid changes in technology and the resulting increased importance of data.
According to Iati, creating data products, using raw data, and enhancing capabilities to meet the needs of customers and financial institutions is a challenge for service providers.
“It’s very scary because we now know that technology can do things we never imagined,” Iati told Traders Magazine.
“Five years ago, it was much easier to understand how financial institutions use data. AI can now provide a level of predictive analysis that was unimaginable just a short time ago. There is now no end in sight, as that means providers need to think ahead,” he added.
Another key takeaway from this research is that companies are increasingly understanding that data monetization is a key source of economic return, Iati said.
Using more integrated systems, making data more meaningful, and identifying correlations for predictive analytics will ultimately allow companies to monetize their data, he said.
The survey, now in its fourth year, indicates that participants believe the industry will spend more on data each year.
“It’s no surprise that those of us in the industry expect to spend more on data each year than we did the year before,” Iati said.
Additionally, while spending on alternative data has increased over the years, spending on equity data feeds has declined, he said.
“This isn’t all that surprising as we are looking for more real-time data.As we inevitably move away from desktop formats, we are seeing more and more “We’re looking for data on,” he said.
“I think we have so much data on the stock market that investments don’t increase as much because there isn’t that much data available.On the contrary, because it’s new and in some ways undefined. , there is more alternative data available,” he explained.
Furthermore, the industry estimates that demand for ESG data/analysis will slow significantly in 2023, as recent rapid growth is compounded by strength from both internal and external sources.
Iati believes that the areas of greatest growth in 2024 are likely to be some of the fixed income and derivative products.
Iati said 2023 was a huge year for the fixed income market, which was not only reflected in trading and trading revenue, but also in data demand.
“I think that interest rates in the bond market are set the way they are now, so they need to slow down accordingly, in part because last year’s rate hikes were so large. So the interest in data on derivative securities is I think it will continue to rise,” he said.
“While we think alternative data will still be in great demand, we expect the importance of ESG-related data to have peaked,” he added.
Iati also expects overall data spending to increase in 2024, saying, “I think technology capabilities will be the driver.”
