Investing in market data: a new and constantly evolving ecosystem
In any area of life, information is power. In the financial world, this power translates into market data: trading volumes, statistics, opening and closing prices, spreads, trends—anything that allows for a near-real-time snapshot of the global economy.
Investing in data: competitive advantage and technological evolution
Investing in market data has a clear purpose: to gain a competitive advantage. According to a SIX survey: Advanced Technology Use Gives Market Data a Boost chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.six-group.com/dam/images/financial-information/pitch-tool/advanced-technology-use-gives-market-data-boost.pdf, companies and financial institutions are increasing their spending on market data, by between 1% and 5%, a figure that is expected to be even higher when it comes to stock trading and investing.
Data is not only used by traders and analysts; it is also processed by algorithms capable of analyzing thousands of variables in a matter of seconds. This is known as algorithmic trading or high-frequency trading (HFT).
However, the consumption of real-time data is growing beyond the realm of trading: APIs (Application Programming Interfaces) are beginning to be adopted. These allow different applications to communicate with each other and share information without having to write complex code from scratch. They have become key tools for integrating services and improving operational efficiency.
Historical data and regulation: a tool for regulatory compliance
Historical tick data, detailed records of every price movement of a financial instrument, are also of great importance. This data allows for in-depth analysis and is also used to address regulatory needs arising from the use of market data, such as protection against market abuse.
Speaking of regulations, it is key to mention the importance of RegTech (Regulatory Technology): the use of technology to facilitate regulatory compliance in the financial sector.
Its relevance in the consumption of market data lies in the automation of monitoring, analysis, and reporting of information, ensuring accuracy and agility. This allows companies to quickly adapt to regulatory changes and minimize risks.
Furthermore, it is not only investors who depend on market data. Central banks and regulatory bodies also use it to make monetary policy decisions. Thus, data has become a critical tool for global financial stability.
AI, cloud, and new forms of delivery: the future of data consumption
How is market data delivered and consumed today?
Until now, most consumers received data through internet connectivity via local infrastructure. However, the use of the cloud is gaining momentum. The demand for more efficient data delivery methods has led to APIs continuing to gain prominence, leaving aside desktop solutions and secure file transfer protocols.
Technology is moving toward a future in which artificial intelligence will also play a key role, not only in the delivery but also in the consumption of market data. AI/ML applications, such as generative AI and large language models (LLMs), will be used to generate better decisions, combined with human decision-making.
The environmental impact of data: a technological and sustainable challenge
This unimaginable volume of data production, storage, and delivery also poses an environmental challenge. Data centers are the heart of the infrastructure that supports trading and market data processing. According to a study by the International Energy Agency (IEA), these centers account for approximately 1% of global electricity consumption, with the resulting CO₂ emissions.
These centers also consume large amounts of water for constant system cooling. Each algorithmic transaction requires multiple processes and powerful servers, which entails high energy and technological resource consumption.
Furthermore, hardware obsolescence generates a growing amount of electronic waste. All of this poses a major challenge for organizations, which are striving to improve the situation with measures such as migrating to data centers that use renewable energy, using advanced cooling technologies, and implementing carbon footprint offset policies, such as reforestation projects.
Data governance in ARENA: quality, trust, and responsibility
In conclusion, market data is the current basis for making intelligent financial decisions and maintaining the stability of the global system.
With technological evolution and the growth of real-time consumption, managing this data with quality and responsibility is essential to harness its full potential and address current regulatory and environmental challenges.
At ARENA, we actively work on data governance to ensure the highest quality in projects like SDM.
We have a certified data repository that allows us to guarantee excellence in our services and help our clients navigate this new data ecosystem with confidence and responsibility.
