GoldenSource Blog
data mastering, enterprise data management, reference data management,market data management

GoldenSource 101: Market Data Management

What is market data management?

Market Data Management is the process of ingesting, validating, enriching and curating market data. Managing market data also means managing contracts with the data providers. It includes contending with issues such as increased demand for the data even as there are fewer competing suppliers to get the data from. Market data management requires managers to figure out how to deal with increasing costs for this data. Management is distinct from administration of market data, which means handling the market data in keeping with data providers’ restrictions on how the data may be used.

What are some types of market data?

The types of market data can be defined by the information they contain or the way they are received and the level of detail provided. Market data is information about the pricing of financial instruments, types of which can be end-of-day pricing; intra-day pricing, pricing for asks, bids, mids and closes; curves and surfaces for derivatives; and time-series data. More generally, market data can also be in Level I or Level II. Level I is simpler and covers all a trader should need to trade financial instruments. Level II has more details, such as bids and offers other than just the highest ones, as well as which orders have not yet been filled.

What is market data for?

Market data allows financial professionals to see not only the price of a given instrument at a moment in time, but changes and trends over time as well, via time-series. This allows people to more effectively analyze the data point itself, and the points that interact with it, to make better investment decisions and comply with regulatory requirements.

What is a market data platform?

A market data platform is the system in which financial instrument pricing data is ingested, managed, stored, and interacted with via a user interface for analysis and investment decision making. Market data also needs to be related to instruments and issuers, which requires identifiers and hierarchies as part of the data management platform capability.

Why do I need it/why is it important?

Market data management is important for preparing data for financial market models. It’s necessary to know how market data is interacting with market models and the calculations these models perform. Since market data is the whole basis for the functioning of financial markets, it’s necessary to make sure you’re getting complete market data and using it effectively to support trading activity in your firm. There are several areas where managing market data correctly is necessary:

  • To get data to investors who are deciding whether to buy or sell securities.
  • To trigger automated orders based on certain market data figures.
  • To analyze a stock’s volatility and therefore predict risks of those investments.
  • To analyze historical performance of a stock as a basis for understand recent activity in that stock.
  • To find patterns that may indicate the future direction of prices for securities.

What should I look for in a good one?

What you’ll need is a market data management solution that provides you with robust coverage of market data types, attributes and definitions, which can be achieved with an industry standard data model. You’ll also need out of the box rules and workflows, as well as integration capabilities with down and upstream systems, both internal (such as a data warehouse) and external (such as data vendors). Finally, the solution will need to be accessible to non-IT personnel, with the ability to easily construct meaningful, actionable extracts of the data and UI workflow screens.

All Posts