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COVID-19 Exposing Market Data Gaps

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In the move to business continuity measures (BCP) during the coronavirus chaos, some banks have managed better than others – and the crisis has exposed some glaring holes in the preparations of many major institutions. While the move to BCP appears to have gone relatively smoothly, the radical difference in the way firms are now functioning – and the new normal when it comes to remote working – means that while operations might be on track, some areas (such as access to market data) have not been as well prepared for.

Most firms have had an operational resilience plan in place for many years, and firms that invested into technology and infrastructure early on are now reaping the benefits. Many major banks have had these measures in place for decades, and swung relatively seamlessly into action regarding split sites, split teams, and of course remote working.

But while most people are getting on with the job, market data could emerge as one of their biggest stumbling blocks.
“In terms of data management, a lot of the vendors are quite limited in terms of how you can access their data,” explains an asset manager, who asked not to be named. “This could be a prompt to review market data licensing and data acquisition, in terms of efficiency under these situations. We are working with the vendors to get around these issues right now, but really it’s a question of speed – can we access what we need when we need it?”

There are also concerns in some quarters that firms may not have fully explored the options (or requirements) for market data access in their BCP/disaster recovery plans, which often cater for a site being destroyed (as with 9/11) rather than staff moving to remote locations as under the current situation.

Some providers handle this better than others. Bloomberg, for example, offers Bloomberg Anywhere, which allows subscribers to access their Bloomberg Terminal account from any PC or Mac through downloading software or accessing it through the cloud. The firm also offers its own disaster recovery service, providing users with access to their terminal subscription, including trade and post-trade services, with administrators able to grant remote access where needed. The service also offers off-terminal integration, partnering with Microsoft Office and providing custom applications from third-party vendors.

But of course, all this comes at a cost. According to one industry professional, banks could be paying an extra 175%-275% on their total market data spend (including vendor licensing fees, the technology cost of hosting the additional environment, management of the additional environment, exchange fees, etc.) to activate BCP market data access. “It’s an incremental reduction in profitability, yes,” he says. “But the banks can afford to pay – the cost of infrastructure is not an issue.”

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