We hear a lot about macroeconomics and globalization these days, but what about micro-economics and regionalization? Many of the trends we read about or experience firsthand suggest that the world is increasingly becoming one large global marketplace, with fewer barriers across borders and asset classes, and massive consolidated exchanges, vendors and market participants, operating around the clock. But against this trend, there is increasing interest in more granular data at the regional or instrument level that is prompting the development of new services to source, aggregate and make sense of the global smorgasbord of information.
For example, one benefit of a new technology platform that Nasdaq plans to roll out next year for its Global Index Data Service is that it will be able to operate 23 hours a day, five days a week, instead of only 18 hours per day, allowing the exchange to meet global demand for its indexes, even when Nasdaq’s markets are closed. However, it will also enable Nasdaq to develop new indexes, which could provide benchmarks or exposure to a specific region or industry, while the exchange has already received demand from Asian index providers wanting to distribute indexes over the platform.
But entering new regions isn’t possible without detailed underlying information on a marketplace. For example, ISI Emerging Markets has launched a regional version of its Emerging Markets Information Service for the greater MENA (Middle East and North Africa) region in response to client demand for high-quality and reliable local data. Meanwhile, exchange-traded fund data specialist XTF has rolled out new performance and fund flows heatmaps over the past year (XTF says ETFs are a better indicator of fund flows into or out of a region because the products are more liquid than mutual funds), and plans to expand its coverage next year to serve registered investment advisers seeking information on exposure to new markets.
Much of the demand for these products is being driven by traders in developed markets seeking exposures elsewhere, and that ultimately the globalization trend is the reason why regional data is now becoming important and accessible. But when Rabobank’s Dutch private asset management business needed new data terminals, local market coverage—rather than a broader, global service—was a key requirement, officials say.
Key to exploiting demand at all levels and actually making new types of data useful is integrating granular datasets into widely-used data products and other services, such as the integration of commodities trading data from Pivot Inc.’s instant messaging system into trading and risk management platforms from Allegro Development, or the incorporation of fundamental data from Infinancials into Saudi Arabian vendor TradeNet’s trading platform.
Put this together and you have global and regional forces, operating independently, but contributing to a common goal of more transparency at all levels and greater interconnection between instruments and markets, leading ultimately to greater globalization. Dual forces, and dual challenges for data consumers and vendors that must source data at the underlying region or instrument level and aggregate and correlate it to create valuable global datasets.
How do you do this? Perhaps by using new types of search engines, such as 9W Search, created by the founders of Edgar Online, which uses XBRL tagging to extract, display and compare financial data. Or, with so much data to trawl through—much of it unstructured data—perhaps firms will increasingly use services such as the behavioral research and language recognition tools of MarketPsych to filter and identify relevant information, while acting as a “radar” for sentiment-induced trading opportunities.
But whatever radar you use, be sure it can detect “below-the-radar” trends as well as the major blips, to track the entire data airspace.
The founder and CEO of Imperative Execution looks at how trade execution is changing and what that means for the buy side.Subscribe to Weekly Wrap emails