Slow Economic Growth Expected to Impact Market Data Sector

Last year, global spend on information and analysis grew 1.17 percent to USD 26.6 billion and the Americas and Asia showed positive growth, but according to predictions from market participants, the industry is projected to grow by just 1.2 % in 2016, and 1.17 percent in 2017

In order to compile the forecasts, Burton-Taylor surveyed 71 market participants including market data vendors, consumers and analysts, and consultants. "The survey is based on sentiment rather than actual figures; we ask people to estimate what they think the organic growth will be without price increases from vendors," says Douglas B. Taylor, managing director of Burton-Taylor.

According to the results of the survey, market participants are more pessimistic about growth this year than last. In 2015, the prediction for growth was four percent because there were positive expectations that the US and Western Europe would recover economically, as well as strong growth forecasts in China and India.

"Much of the optimism around Western Europe and the US seems to have waned. The economies are improving but the election in the United States has people worried. I also think that if you look at the way banks have been challenged this year, the combination of banks having to reduce costs and desktops, combined with deal volumes that are down 80 percent, has had a real impact on investment banking, and the demand for research, fundamental data and analytic tools," Taylor says.

While forecasts for demand for market data from Asia's main markets-China, India and Japan-continues to be strong, there is also more optimism that demand will increase for non-core markets such as Indonesia, Vietnam and South Korea. "There is slowing growth in China and India so it's natural for people to lower their expectations and this allows them to turn to other markets in Asia that have economies that might be growing faster," Taylor adds.

The survey also revealed that demand for data and tools that firms help firms to comply with regulatory standards around their reporting activities-including pricing and reference datafeeds, order management and risk management systems, and valuations-are expected to grow faster than any other market segment. Meanwhile, expectations are low for growth in demand for desktops and real time data.

"I call this captive demand. It reflects demand that is mandated. Firms don't want to buy the data but they have to, and regulations are not going away. If anything they are going to become more stringent and affect more instruments in the future, and vendors, particularly, Bloomberg, Thomson Reuters, Interactive Data and Markit, are benefitting," Taylor says.

The full version of the report will be available for free download at www.burton-taylor.com on June 8th.