Financial data vendor

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A financial data vendor provides market data to financial firms, traders, and investors. The data distributed is collected from sources such as stock exchange feeds, brokers and dealer desks or regulatory filings (e.g. an SEC filing).

Contents

History

Financial data vendors have been in existence as long as financial data has been available. The first technology that allowed data vendors to disseminate was the ticker tape starting in the 1870s. Financial data includes "pre-trade" such as bid-ask data necessary to price a financial instrument and post-trade data such as the last trade price and other transaction data.

From ticker tape to television cameras, from databases to websites this multibillion-dollar industry provides data utilized in the financial sector. Paper ticker tape became obsolete in the 1960s, as television and computers were increasingly used to transmit financial information. The concept of the stock ticker lives on, however, in the scrolling electronic tickers seen on brokerage walls and on news and financial television channels.

Because the financial investment needed to provide the services needed, the industry had become ever more consolidated, but in 2004 it was forecast that the industry was beginning to fragment. [1]

Industry size

According to the 2009 Burton-Taylor report, the Market Data industry exited 2009 at US$22.68 billion after closing 2008 at US$23.01 billion. In 2009, Thomson Reuters and Bloomberg market share were virtually even, at 29.4% and 29.2% respectively.

As of 2008, the largest four financial data vendors capture the $15.222 billion in annual revenues [2] [3] [4] and employ tens of thousands of people. [5] [6] [7]

Types of data

There are many different types of instruments (including stocks, bonds, funds, options, futures, currencies, etc.) and hundreds of different markets for investment, leading to an extremely large and hard to define universe of data. [8]

The types of data offered vary by vendor, and most typically cover information about entities (companies) and instruments (shares, bonds etc.) which companies might issue. Typically, pricing data is sold separately from other related data, such as corporate actions and events, valuation information, fundamental data including company performance and reference data on the entities and instruments themselves.

In addition to market price data there are data known as market reference data, such as a ticker name, which describe securities, commodities and transactions.

Intraday data [9] is any data that is released within the same day or trading session.

The majority of financial data vendors can access data during trading sessions but with the requirement that any inquiry be in reference to historical market analysis. [10] Analysis of historical market data provides a larger snapshot of the market at the expense of timely information (time inbetween database updates).

Alternative data (finance) vendors offer non-traditional datasets, typically defined as those that do not originate from securities exchanges, regulatory disclosures, or economic release indicators. These are used by quantitative and fundamental investors to enhance portfolio returns. Examples include consumer transaction data, satellite imagery, vehicle movements, and web data, including social media data. With an estimated three out of four financial institutions housing alt-data teams as of 2020, and 90% of firms expanding their alt-data strategy, alternative data is now arguably mainstream. [11]

Services offered

Most of the market differentiation between competitors is based on some combination of the following:

List of financial data vendors

The following are some notable financial data vendors that distribute data from multiple exchanges: [12] [13]

See also

Related Research Articles

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<span class="mw-page-title-main">Speculation</span> Engaging in risky financial transactions

In finance, speculation is the purchase of an asset with the hope that it will become more valuable shortly. It can also refer to short sales in which the speculator hopes for a decline in value.

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<span class="mw-page-title-main">Ticker symbol</span> Abbreviation identifying specific shares

A ticker symbol or stock symbol is an abbreviation used to uniquely identify publicly traded shares of a particular stock on a particular stock market. In short, ticker symbols are arrangements of symbols or characters representing specific assets or securities listed on a stock exchange or traded publicly. A stock symbol may consist of letters, numbers, or a combination of both. "Ticker symbol" refers to the symbols that were printed on the ticker tape of a ticker tape machine.

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<span class="mw-page-title-main">Bloomberg Terminal</span> Computer software terminal made by Bloomberg LP

The Bloomberg Terminal is a computer software system provided by the financial data vendor Bloomberg L.P. that enables professionals in the financial service sector and other industries to access Bloomberg Professional Services through which users can monitor and analyze real-time financial market data and place trades on the electronic trading platform. It was developed by employees working for businessman Michael Bloomberg. The system also provides news, price quotes, and messaging across its proprietary secure network. It is well known among the financial community for its black interface, which has become a recognizable trait of the service. The first version of the terminal was released in December 1982.

<span class="mw-page-title-main">Ticker tape</span> Digital communication media

Ticker tape was the earliest electrical dedicated financial communications medium, transmitting stock price information over telegraph lines, in use from around 1870 through 1970. It consisted of a paper strip that ran through a machine called a stock ticker, which printed abbreviated company names as alphabetic symbols followed by numeric stock transaction price and volume information. The term "ticker" came from the sound made by the machine as it printed.

A Refinitiv Instrument Code, or RIC, is a ticker-like code used by Refinitiv to identify financial instruments and indices. The codes are used for looking up information on various Refinitiv financial information networks and appear to have developed from the Quotron service purchased in the 1980s.

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<span class="mw-page-title-main">Market data</span> Electronic financial trading price and related data

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Reuters 3000 Xtra was an electronic trading platform which was released by Reuters in 1999 and supported until the end of 2013. It was typically used by professional traders and financial analysts in trading rooms. It was superseded by the Eikon platform, first released in 2010.

<span class="mw-page-title-main">Bucket shop (stock market)</span> Business that allows gambling based on the prices of stocks or commodities

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High-frequency trading (HFT) is a type of algorithmic trading in finance characterized by high speeds, high turnover rates, and high order-to-trade ratios that leverages high-frequency financial data and electronic trading tools. While there is no single definition of HFT, among its key attributes are highly sophisticated algorithms, co-location, and very short-term investment horizons in trading securities. HFT uses proprietary trading strategies carried out by computers to move in and out of positions in seconds or fractions of a second.

A quantitative fund is an investment fund that uses quantitative investment management instead of fundamental human analysis.

An exchange-traded product (ETP) is a regularly priced security which trades during the day on a national stock exchange. ETPs may embed derivatives but it is not a requirement that they do so – and the investment memorandum should be read with care to ensure that the pricing methodology and use of derivatives is explicitly stated. Typically, individual underlying securities, such as stocks and bonds, are not considered ETPs.

Stock market data systems communicate market data—information about securities and stock trades—from stock exchanges to stockbrokers and stock traders.

The Financial Instrument Global Identifier (FIGI) is an open standard, unique identifier of financial instruments that can be assigned to instruments including common stock, options, derivatives, futures, corporate and government bonds, municipals, currencies, and mortgage products. Also see: Open Data

<span class="mw-page-title-main">Securities market participants (United States)</span>

Securities market participants in the United States include corporations and governments issuing securities, persons and corporations buying and selling a security, the broker-dealers and exchanges which facilitate such trading, banks which safe keep assets, and regulators who monitor the markets' activities. Investors buy and sell through broker-dealers and have their assets retained by either their executing broker-dealer, a custodian bank or a prime broker. These transactions take place in the environment of equity and equity options exchanges, regulated by the U.S. Securities and Exchange Commission (SEC), or derivative exchanges, regulated by the Commodity Futures Trading Commission (CFTC). For transactions involving stocks and bonds, transfer agents assure that the ownership in each transaction is properly assigned to and held on behalf of each investor.

References

  1. ↑ Delaney AP. (2004). The end of the age of the Big Vendors? The Handbook of World Stock, Derivative and Commodity Exchanges.
  2. ↑ "Yahoo Finance - Business Finance, Stock Market, Quotes, News". biz.yahoo.com.
  3. ↑ "Annual Reports | Financial Information | Investor Relations | Thomson Reuters".
  4. ↑ "PDF" (PDF). Archived from the original (PDF) on 2011-07-16. Retrieved 2010-01-15.
  5. ↑ "SIX Group - Organisation". Archived from the original on 2010-06-19. Retrieved 2010-06-15.
  6. ↑ "About Us". Thomson Reuters. Archived from the original on 2011-01-01. Retrieved 2010-06-15.
  7. ↑ "FAQ" – via www.bloomberg.com.
  8. ↑ Anderson D. (2005). The market data 'industry' 2005. ''The Handbook of World Stock, Derivative and Commodity Exchanges.
  9. ↑ "Intraday Quotes for Major Stock Exchanges". QuantShare Trading Software.
  10. ↑ "Historical Stock Market Data". QuantShare Trading Software.
  11. ↑ Ekster, Gene; Kolm, Petter N. (20 October 2020). "Alternative Data in Investment Management: Usage, Challenges and Valuation". SSRN   3715828.
  12. ↑ "Nasdaq Market Data Vendors".
  13. ↑ "Licensed Market Data Distributors".
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