There is a large variance in market data pricing between wholesale market data buyers, according to Substantive Research June 2022 study.
The survey canvassed 40 asset management firms with $5 trillion in combined assets. Thirty percent of the firms are hedge funds, while the rest are long-only managers.
Sixty percent of the managers are based in Europe and 40% are based in North America.
The research and data discovery and spend analytics provider for the buy side found institutions are paying up to 10 times more than peers on pricing and reference data.
For index data, some institutions are paying over 13 times more than peers, and for ratings data, some institutions are paying over 3 times more than peers.
The study found that these inconsistencies continue throughout the market data industry’s pricing, posing significant challenges for heads of market data globally, who need to navigate a lack of transparency around pricing and the availability of viable market data alternatives.
“The pricing in these vital procurements is traditionally opaque and difficult to understand in context with peer procurement spend,” said Mike Carrodus, CEO of Substantive Research. “Some providers are more inconsistent in what they charge than others, which is important to understand as this will change consumers’ strategy and approach in each case.”
He added, “Many incumbent vendors have been extremely successful in becoming ‘have-to-have’ through investment in their products, technology and marketing capabilities, so their leverage in pricing can be seen as a natural reward for these efforts.
However, within a volatile market climate, procurers are more focused than ever on ensuring efficiency in their market data budgets, creating an adversarial negotiation dynamic which is exacerbated in tough times.”
“Greater transparency can only ensure the right balance between providing the right incentives for vendors, while also allowing consumers to optimise their budgets. We’re proud to be able to respond to our customer’s wishes in this way and use our proven methodologies to help them understand the truth within these opaque pricing frameworks.”
Substantive Research’s June 2022 study identified a large variance in market data pricing between wholesale market data buyers with similar use cases, which showed that some institutions are paying more than twice as much as their peers for a single index from the same provider and almost five times more for reporting licenses.
