Using APIs and Unstructured Data to Maximize Investment Opportunities

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1 September 2019
Eiichiro Yanagawa

The Rise of Research Management Systems in the Japanese Capital Markets

ResearchTech Heats Up

ResarchTech is gaining traction and momentum in capital markets around the world.

With the steady surge in fintech service providers, investment research units that have historically been comparatively out of sight and out of mind are facing new challenges and opportunities. Through digitizing, reimagining, and reinventing their research activities have been empowered to effect change across the value chain. Similar to other services such as financial and IT services that have experienced the turbulent disruption that digital can bring, buy-side research units and existing players can be expected to be paying greater attention to new services and the movements of new entrants while exploring possibilities ranging from partnerships and alliances to acquisitions.

In the EU, MiFID II has led to shrinking budgets for research spending and a decrease in the number of research counterparties. Some global buy-side organizations are completely rethinking their research spending budgets as part of efforts to optimize their worldwide capital markets-related research costs. In addition, many US asset management firms have taken a page out of the book of their European counterparts, revising their research spending budgets based on the MiFID II and shifting to in-house development. Likewise, a similar trend is also being seen in the Japanese market. Sell-side securities houses are pressing ahead with harnessing AI and ML (machine learning) in algorithmic trading while asset management firms are merging and through a process of consolidation accelerating their work to optimize research budgets and use them effectively.

Celent is particularly focused on reform and evolution in the production, distribution, and consumption of investment research information in Europe. Across the value chain there, fintech is as a result of an explosive surge in data, tools, and distribution methods spurring a rethinking and reinvention of research departments and research activities. Asset managers are harnessing ML to analyze more efficiently traditional market data and alternative market data sources. In addition, new types of research aggregators are offering new content in a MiFID II-compliant environment to improve the client experience in ways that transcend merely facilitating compliance.

Investment decision-making in capital markets is becoming increasingly sophisticated. At the same time, we are also witnessing dramatic changes in how investment research information is produced, distributed, and consumed. This change has resulted in a thriving research management system (RMS) sector and market. The key players behind this are new analytics technology vendors and market data vendors that provide structured and unstructured data in an integrated manner.

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