Burton-Taylor: Regulatory Data Requirements Drive Global Data Spend Above $27Bn

Pricing, reference and valuation data to support risk and regulatory compliance purposes grew at an average of 8.51 percent over the past five years, with these areas offsetting contractions in vendors’ terminal and traditional front-office data business lines. “As long as we’re being driven by regulation, those selling this data will benefit from that, while everybody else will continue to face challenges,” says Burton-Taylor managing director Douglas Taylor.

In terms of vendor market share, Bloomberg topped the table with flat market share of 33.4 percent, while Thomson Reuters fell slightly from 24.24 percent to 23.14 percent. Behind these came S&P Global Market Intelligence, FactSet Research Systems, and the Interactive Data portion of Intercontinental Exchange’s ICE Data Services division (Burton-Taylor excludes ICE’s proprietary exchange revenues from the research), though Taylor declines to provide market share figures for these and other vendors.

Bloomberg’s continued dominance is despite an estimated drop of 3,145 terminals to 324,485 terminals worldwide, offset by 10 percent growth in its non-terminal business, Taylor says.

“Total global spend on datafeeds—real-time and non-real time—was more than $5 billion, which is more than 20 percent of the market. But it has grown at a five-year compound annual growth rate of 7.8 percent,” he says, adding that while there is “no question” that an ongoing fall in terminal numbers is underway, it does not necessarily correlate directly to the growth in datafeeds, as feeds might still be used to populate terminal applications.

That said, while some vendors will need to be “more creative” about how they break down and price datasets individually outside of their shrinking terminal businesses, “There is still one company that can charge $25,000 per year for a terminal—and that’s a testament to the fact that so much of the market depends on Bloomberg that they become resistant to changing for fear that they might miss something that someone with a Bloomberg can see,” he says.

S&P, meanwhile, grew revenues by almost 22 percent year-on-year, half of which was a result of acquiring SNL Financial, with part of the remainder driven by price increases on the back of the acquisition. “With all the big players claiming a 90 percent client retention rate… if you assume the industry remains flat, you’ve only got 5 to 10 percent of churn to fight over for growth… so you’re looking for a differentiator that breaks you out of that 5 to 10 percent churn. That could be regulation, a new tool…. For S&P, the SNL data was a differentiator, and they can charge more for it,” Taylor says.

Optimism

This year’s report represents the first time that estimates of industry spend have topped the $27 billion mark, though Taylor says the 3.45 percent growth was a surprise, based on other research. Burton-Taylor’s mid-year survey of industry sentiment last year revealed generally pessimistic expectations for the full-year, with respondents expecting a decline in spend.

“The sentiment survey is not a scientific survey, so I don’t view the results as predictions. But, it has generally been correct about predicting direction and rates [of growth]… and so I expect more optimism from our survey this year. I don’t get the same feeling of pessimism from the people I spoke to for this report as I did for the sentiment survey six or eight months ago,” Taylor says.