State Street Global Exchange (SSGX) is building out its data offering with alternative data services designed to provide unique market insight for its clients. The services include MediaStats, which aggregates media derived insights to provide an understanding of industry and macroeconomic trends; PriceStats, which provides high-frequency measures of inflation and real exchange rates drawn from prices on millions of items sold by online retailers; and Environmental, Social and Governance (ESG) Indicators, which are derived from a combination of third-party data providers, natural language processing and machine learning technologies.
The company also uses proprietary data to provide products such as GX Private Equity Index, which aggregates client cash flow data received as part of SSGX’s custodial and administrative services, and provides comparative information for private equity performance.
These data services reflect the company’s commitment to helping clients find new ways of using both public and proprietary data to inform investment processes – and there are more to come. David Pagliaro, senior vice president and head of EMEA at SSGX, says the company divides alternative data into five buckets: transactional, movement, climate and weather, sentiment and behavioural, and production data. It has solutions based on the transactional, sentiment and production buckets – namely PriceStats, MediaStats, ESG Indicators and GX Private Equity Index.
A recent addition to the portfolio is Verus, a mobile-first application that makes connections between news coverage and investors’ holdings through the application of big data, machine learning, natural language processing and human intelligence. The aim is to help investment professionals gain greater insights, mitigate risk, and generate alpha. To do this, the service gathers content from thousands of news services and combines machine learning algorithms with portfolio data from truView, State Street’s risk analytics platform, to create newsfeeds for users, score the relevance of news stories to portfolio holdings, and create alerts that help investors answer the question of whether they should care, or how much they should care, about reported news incidents, perhaps a fire at a factory in China.
Pagliaro says take up of these added-value and alternative data services is strong as asset managers look to buy off-the-shelf alternative data services rather than raw datasets from the hundreds of start-ups aiming to capitalise on investment companies’ growing interest in alternative data. Looking forward, he concludes: “We are just five years away from major use of alternative data in financial markets.”