2020 and 2021 have been years of turmoil and change to the extent many newsworthy trends and highlights that would otherwise been at the forefront are going unremarked, and in financial data none more so than S&P Global taking the crown as the revenue kings of market data, through its acquisition of IHS Markit.

Since the start of the millennium, Bloomberg has been accepted as the gold standard market data vendor. This status was confirmed in 2011 when Bloomberg finally displaced Refinitiv (then Thomson Reuters) as the undisputed number one in financial data by revenue generation. In the following decade Bloomberg kicked on subsequently rising to an estimated $11,000 Million in revenues year ending 31/12/2020.

However, in 2021 a new candidate has ‘e-merged’. In 2020 S&P Global ($7,442 Million) and IHS Markit ($4,288 Million) produced combined revenues of $11,730 Million and when the two amalgamate this year that position will be cemented.

To many people, especially Bloomberg users on the desk, this will come as a surprise, possibly even a shock. Wandering around dealing rooms it is hard to find, or at least spot, any other vendor except Bloomberg. Yet this reality only goes to demonstrate that the data action has long since shifted from the terminals on the desk to enterprise wide data usage, analytics, and datasets created and driven by Intellectual Property Rights, such as indices and benchmarks

The other reason I believe this item of interest falls by the wayside is because Bloomberg is not listed, has no real world market cap, nor publishes accounts. I had to extrapolate Forbes’ 2019 figures and use the 2015 ICE/IDC purchase as a benchmark for calculating a notional market cap. Industry analysts are not running the numbers, so this event goes unnoticed.

This passing of the tiara sets the market data industry tone for the 2020s where datasets created around IP are perceived to have the greatest value.



Why S&P and why now?

Why now? Simple, the merger of S&P Global with IHS Markit is creating an IPR driven data behemoth which together generates more revenue than Bloomberg. Market value over the last 10 years has shifted from providing data produced by external sources to owning the data IP itself. S&P Global and IHS Markit have both been leaders in the fastest growing segments of the financial information industry.

It is their ownership of proprietary indices, ratings, and unique specialist data that provides not only a competitive edge but services that cannot be replicated, and once subscribed to is very hard to cancel. Their proprietary datasets have become brands like the S&P500 or the Markit Red Codes.

By comparison Bloomberg is easily the number one data aggregator, its business built around the now ubiquitous high margin, competition steamrollering, Bloomberg Professional Terminal with an estimated 70%+ of the premium institutional market for desktop data.

The problem is the rate of desktop usage growth has declined since the 2000s and now has limited future growth potential. Bloomberg’s forays outside terminals and datafeeds have been selective, not transformative, with such deals like buying Barclays Indices, Polar Lake, and RegTech.

This suggests that at first sight Bloomberg and S&P Global appear two different animals, with seemingly little overlap other than being in the business of providing financial information and services. 

Dig below the surface and we shall find there is far more direct competition between the two. Analytics is a major data battleground for the 2020s. There is only so much that can be done with raw data, even if that data is IP driven, because financial institutions are competing at the investment decisions tool level, and both Bloomberg and S&P Global/IHS Markit have invested heavily in analytics.

However, for now S&P Global awaits its coronation as the number one by revenue in market data.

Keiren Harris 25/03/2021

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