Market Data and other subscription costs must come down. Eliminating underused premium terminals, replacing premium terminals with more cost-efficient alternatives, and cancelling subscriptions to data sources that only replicate data already available from other sources will bring you the savings you need.
However, from our experience in delivering these cost saving projects to hundreds of firms on both the buy and the sell side we have found that in the years after the project, Market Data costs tend to go back to where they were before. Again, budget and resources are needed for a project to bring them back down again. This renewal of effort is unnecessary and preventable. TRG Screen has developed a framework of Market Data Management roles and processes to make sure your data spend will remain under control. We call this our Five Pillars of Market Data Management. What is it, and why do you need it?
Key is governance
Key for Market Data Managers to be and remain in control is governance. In our Five Pillar model, the governance is split into three distinct levels:
Market Data Strategy - What do you define as acceptable and how do you want to achieve it?
Demand and Vendor Management - What should someone in a certain role have, and where and how can they procure it?
Cost and Delivery Management - This involves making sure users get what they need, and budget owners are informed on costs, and their drivers.
Having a clear governance model in your Market Data Management will help you stay in control of the firm’s budget while at the same time enabling you to perform the day to day tasks of assigning terminals, renewing contracts and preventing compliance issues as efficiently, and effectively as possible. Let’s explain this through an example:
Our client, Bank A, faced with diminishing returns and lower profitability, started a project to cut cost aggressively. Through our Quick Scan offering, we helped Bank A with identifying duplicate data sources and under-used terminals. We advised on alternatives for the market leading terminals that were in use throughout the bank. To make these changes sustainable, we helped them to implement not only the cost saving opportunities but also a governance model based on our Five Pillars.
A strategy was formulated - only premium terminals for those users dealing directly in the market, preferred suppliers for subscription, alternative terminals elsewhere in the bank and a target for Market Data spend as being below market practice. Based on this strategy, in the Demand Management role, profiles for the most common roles were defined in close cooperation with the business and standard data access was determined for each role. A board was implemented to deal with exceptions. These changes made sure that most of the requests that previously were handled through lengthy e-mail threads were now dealt with by submitting a single ticket. Similar changes were implemented for the Vendor Management role.
TRG Screen's Managed Services
The operational roles - Cost and Delivery Management - are now supported by best in class tooling: TRG Screen's managed services offering. This enabled Bank A to further standardize and optimize its Market Data operations.
The result: sustainable cost savings not only on direct data spend but also on the Market Data Management operational costs.
For more information on our Five Pillar model, TRG Screen's management service, or our Quick Scan consulting capabilities please contact us.