THE NEW AGE OF DATA
When Chou En-Lai was asked “What were the historical effects of the French Revolution?” he cryptically responded, “It is too early to tell”. At the beginning of 1789 the Ancien Régime had no inkling of the revolutionary tsunami that was going to sweep not only them, but pre-industrial society into oblivion.
Today we are living in the age of data, where an unseen revolution is taking place, which, like it or not, we are all a part of, and is leading us almost blindly to a quite misunderstood transformation of society, businesses and interaction. Smart businesses will data innovate, many will simply adapt, while the rest face the fate of the Bourbons.
FINANCIAL MARKETS: THE BELLWETHER INDUSTRY
Financial markets are the bellwether industry for data trends, which is one of the reasons why we focus on them in this article. Market Data is at the heart of investment trading globally, it leads other industries in terms of:
- Content acquisition
- Data utility and usage
- Technological adoption
Market Data has either directly or indirectly engendered innovation, the creation of new services, analytics, and businesses to support investment globally.
Analysing how financial institutions leverage their information and data resources provides insights into how businesses in other industries will function in the future. Financial markets is the business of money and the original FinTech is market data and the technology that drives it.
2010s FOUR MARKET DATA TRENDS
Market Data has been transformed dramatically since 2010 in four distinct ways, with technology playing the key enabling role.
1.Building Proprietary Data Portfolios. Information and data is about ownership which gives control. Being the owner of unique data is important, along with liquidity especially in Over-The-Counter markets like Fixed Income, Credit, and more recently Commodities, Energy and Logistics. These are fast becoming key factors in the provision of Alternative Data and ESG Data
2.Development of multi-asset class trading platforms, which provide price discovery, market levels and opportunities to introduce new buyers to new sellers, quickly, efficiently, cheaply, and electronically. Expanding the marketplace in breadth and depth
3.The provision of value added services. Data on its own has value, what has more value is converting that data into formats and outputs that lead to investment decisions. Analytics, models, and decision tools convert data into opportunities, which in turn neatly generates more data
4.Industry consolidation, especially where data sources and vendors are bulking up by acquiring specialist services, especially high value indices & benchmarks, evaluated prices, LEIs, Regtech, Insurtech and Lawtech
Better technology facilitates better access to, formatting of, distribution, and storage, of data that is structured, semi-structured, and unstructured.
In the 2020s these trends are accelerating.
WE ARE THE DATA SOURCES
Every company, every person is a data creator as well as being a data consumer in the digital world. When one views this world from above, if we could because there in above, more perspective, we quickly see an environment where control over data gives advantages in terms of making money, business, politics and the ability to influence an individual’s life. In this digital world an individual willingly or unwittingly gains convenience (social media), ability to do things that once required an intermediary (invest/buy-sell goods & services/discover previously hard to get information) but at the same time cedes ownership over their digital soul.
Their individuality, what they do, where they do it, when they do it, how they do it, becomes just another consumable. A very valuable one as financial institutions apply the sum of human activity (i.e. data) to their global investment strategies and activities.
SUMMARY
The key questions are:
1.What stage are we at in the revolution? Well the Bastille has been stormed, the Committee of Public Safety is well into its work (thankfully without the terror), and society is being changed/re-engineered all around us
2.Where will the revolution take us? It depends upon who ultimately ends up in charge. The Data Barons? A future Data Napoleon? Perhaps, and hopefully, the Data Guardians of our best interest?
Old Chinese curse ‘May you live in interesting times’, the world of data today is most interesting.
In the market data world, it looks positive, there is greater than ever access to more data, enabled by cheap technology which gives the man in street access to data providing ever better insights to what is happening in financial markets than that person’s counterparts had 20 years ago.
At the same time Financial Institutions supplied by more and higher quality data in a regulated environment can (theoretically) make better decisions.
Keiren Harris 09 August 2022
Please contact info@marketdata.guru for a pdf copy of the article
For information on our consulting services please email knharris@datacompliancellc.com
