The TRADE predictions series 2023: Data, part two

Participants across Sarasin & Partners, FINBOURNE Technology, IRESS and Nasdaq, deep dive into the data trends for 2023.

By Editors

Mohammed Sohail, head of trading, Sarasin & Partners: The top theme for 2023, will be around optimising automation, focused on the whole trade cycle. Development of transaction cost analysis (TCA) will become more important as we look to extract as much data to make analysis more in-depth. Along with this the regulatory changes especially with the US moving to T+1 will be important in terms of how we solve problems this may create.

Neil Ryan, regulatory lead, FINBOURNE Technology: As the process of refining the requirements for a bond consolidated tape (CT) draws to a close, buy- and sell-side, and regulatory bodies are looking past the data quality challenges previously identified, to the practicalities of how a CT will deliver data. Taking an interoperable, API-first approach to CT data is going to be the first step towards joining up data with complete accuracy and confidence. However, while APIs are an essential starting point, they are not a complete strategy in themselves. Firms will need to consider whether they have the right control environment, entitlements protocol and domain knowledge, to translate across these data sets and the varying formats each uses, to garner granular insights that will drive growth. One obstacle we see in the way of this and will be a key theme for 2023 is the legacy infrastructure capital markets firms currently operate in, given recent reports have found as many as 60% of buy- and sell side-firms are still reliant on a mainframe – despite the industry push towards the cloud.

The advent of CT offers an opportune time to review the investment technology and data processes in place, and whether these will enable firms to efficiently extract and derive value from CT data, without additional cost and resourcing. This is particularly timely in a market with heightened volatility and geopolitical disruption. Being able to harness real-time data across critical data sets – including CT data – to gain a live view of positions, portfolio, risk, and exposure is going to be critical. A combination of a fit-for-purpose CT, an open API strategy and a holistic approach to organisational data delivered by the right data stack, will create the most consistent and valuable understanding of market prices. Crucially, pairing insights from CT data with other data sets and making it available across the organisation, not only promotes greater access to liquidity across functions, but ultimately, greater transparency of market opportunities, for growth and prosperity.

Lionel Sancenot, managing director Continental Europe, IRESS: For trading desks in 2023, we see a few key trends developing around market data, driven by growing client demand for better flexibility in their data provision partners. Desktop interoperability will play a more important role. Today, trading firms are not only interested in the quality and insights of market data, but also the ability to work seamlessly across multiple applications, driven by the need to be more efficient in a cost-conscious world. We see the potential for consolidation in the data provision sector, via increased M&A across market data infrastructure providers. To remain competitive as clients’ requirements consistently expand, larger organisations will be looking to secure additional data streams covering more instruments, markets and geographies to offer their clients, as well as owning unique data sets to commercialise. We expect market data providers will also keep pace with volatile markets by committing to new sites (such as the Euronext data site in Bergamo, Italy), giving them better proximity to exchanges, keeping latencies as low as possible. More market data solutions will move to the cloud and we expect discussions will progress in the Eurozone on the consolidated tape, however we doubt a resolution will be found next year.  

Brandon Tepper, senior vice president of investment intelligence at Nasdaq: High inflation, rising interest rates, and heightened uncertainty have led to increased market volatility and magnified the importance of investors having greater access to actionable data and analytics. Emerging strategies that we’re expecting to see investors lean in on to help them recession-proof their portfolios include leveraging macro-level data as a key leading indicator of economic health. As part of diversification strategies, we see the potential for investors to tap into ESG, commodities and digital assets, and growing financial markets such as Asia, Latin America, and the Middle East for new opportunities. Technology advancements and simple APIs that are accessible via the cloud improves optionality helping investors better catalogue and interact with their data unlocking efficiencies across their businesses. Our position at the intersection of the markets, technology and finance gives us a unique perspective to build demand-driven market-based solutions. With this position, we anticipate and are committed to creating a more seamless data experience helping investors gain investible insights.