Monetizing Market Data in an Evolving Global Marketplace
First Published Friday, 16th December 2011 02:26 pm from Xand : jneff
The opinions expressed by this blogger and those providing comments are theirs alone, this does not reflect the opinion of Automated Trader or any employee thereof. Automated Trader is not responsible for the accuracy of any of the information supplied by this article.
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Technology has led a dynamic transformation of
the exchange industry, and cloud strategies are an important
factor in unlocking the revenue potential of exchange data.
The following article about how to monetize
exchange data via the cloud was recently published in
"How To Build An Exchange," a fascinating
must-read collection from our friends at Mondo Visione. href="http://www.mondovisione.com/filelibrary/download/?FileID=12"
target="_blank">Request access to the full collection from
Mondo Visione here.
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Monetizing Market Data in an Evolving Global
Marketplace
The global environment for
exchanges and data originators is rapidly evolving with exploding
data volumes, increasing and unpredictable regulation, expanding
variety of financial instruments, fragmenting market, competitive
encroachment and the need for new sources of revenue. Beyond
these challenges, the race to microsecond latency will stretch
the infrastructure capacities and budgets at major financial
services firms.
Exchanges and data originators
are struggling to service the opportunities of the future with
the products and solutions of the past. A paradigm shift is
rapidly approaching as old monolithic systems designed for
universal applicability are being replaced by new custom tailored
micro and mobile apps designed to satisfy the needs of a specific
knowledge worker or user type.
The emergence
of new mobile technologies and use-specific applications is
altering the usage patterns of market data and changing the ways
market data is purchased and consumed. If an emerging exchange is
to succeed, it must tackle these issues in new ways.
A few years from now the market data application mix
will boil down to two distinct flavors: low latency and
everything else. How will exchanges capture new market data
revenue profitably and manage the delivery of these two distinct
flavors when their target applications, usage patterns and
infrastructure requirements are so dramatically
different?
Given its
mission-critical impact on trading efficiency, low latency
infrastructure has historically received the bulk of attention
and investment. Meanwhile, legacy data distribution systems are
crumbling under the weight of the increasing volumes of data
produced by low-latency trading. The cost and complexity of
servicing everything else is skyrocketing. Enter cloud computing.
Once thought to be the domain of small and medium-sized
businesses, cloud strategies are now seeing investment from
exchanges and data originators to gain economies-of-scale,
simplify the access and delivery of market data, decrease
time-to-market for new products and add new revenue streams from
new and underserviced segments.
In August of
2011, The Melbourne Group laid out the following cloud action
plan for existing and emerging exchanges:
Make Core Market Data Assets Available from the
Cloud
By creating an Internet-based cloud
offering using standard cloud APIs, exchanges can offer both
institutional and retail customers a means to access their core
market data assets on-demand while driving down both the costs of
access for the customer and the costs of service and maintenance
for all.
Create Cross-Selling Opportunities
with Direct Feed Customers
Direct feeds
designed to service automated trading applications are poor
vehicles for usercentric and mobile applications. A cloud
offering coupled with an exchange's direct feeds allows buy and
sell-side firms to synchronize front and back-office operations
seamlessly.
Monetize Exchange Data Assets by
Targeting Unmet Business Needs
Without the
cloud, the sheer volume of stale data sets make broad delivery
cost-prohibitive to anyone but the largest clients. With the
cloud, exchanges can move away from the one-size-fits-all
approach and offer custom tailored products that allow customers
to select and consume only the data required for their specific
applications, modeling or back-testing.
Expand and Simplify Global Access and
Delivery
Cloud-based delivery can be
complemented with an e-commerce purchase and provisioning system
to access new geographic regions and new customers through a
24×7 web presence which allows customers to select,
purchase and use an exchange's data products without a local
sales organization, or any sales department intervention at
all.
Increase Revenue by Expanding Retail
Channels
A scalable, low-cost cloud platform
allows exchanges to distribute exchange data directly to retail
websites and investors. By accessing these channels directly,
exchanges open revenue streams currently outside their reach and
strengthen their brand within new and existing markets.
Deliver New Products Faster to Meet Emerging Customer
Needs
New trading products create new
information needs for financial services firms and market
participants. The cloud allows exchanges to provide immediate
global access to new market data products, removing constraints
imposed by traditional market data vendors and eliminating
infrastructure investments by customers.
Increase Market Transparency for OTC Derivatives and
Complex Products
New exchange-traded products
and new reporting requirements brought forth by Dodd-Frank,
RegNMS and MiFid create new information needs for financial
services firms and market participants. A cloud solution can
provide both market participants and regulators easy global
access to activity in these markets, providing accurate and
auditable information that helps financial institutions manage
risk and meet regulatory and internal compliance
requirements.
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