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Predict 2022: Combining public and proprietary data to enable in-depth analytics

2022 will see more firms start to capture and analyse both public and proprietary data, which will bring significant value through better informed and more efficient business decisions.

Data is the fuel of financial markets, and yet until now firms didn’t see the value in public data due to it being regarded as incomplete, scattered and unorganised.  This coming year, with an increased focus on transparency and data, we believe there will be solutions emerging in the industry that provide the opportunity to combine both public and proprietary data, adding tremendous context and value, enabling more in-depth analytics.

The driver for change in data analytics

With changing regulation in the EU, data insights are now deemed more important than ever. 2022 will see the EU regulators supporting the introduction of consolidated tape for Fixed Income as part of the update to MiFiD II which was initially introduced in 2008. As a result the EU market will move towards trading firms being required to provide trading data on a single “tape”.

One of the biggest challenges for many traders will be to gain understanding of how to improve their business from the data. On its own, a consolidated tape is a starting point for this. Data analytics capabilities, both API and dashboard based, combined with the ability to bring in multiple other datasets with the CT data, will be key to unlocking value and improving businesses. When offered at low cost, second tier market participants and academic institutions, who currently do not subscribe to data from trading venues due to the current high cost, can respectively become first class market participants and gain critical long term research insights into financial markets.

At Propellant, our founders have seen first-hand how data has been used in the past, and felt that there was an opportunity to provide a data solution that is low cost and accessible, while also creating increased market transparency and providing more insights from data analytics.

Providing efficiency and insight

When combining public and proprietary data the uses are extensive. As an example, it can help firms to fine-tune client flow analysis. While firms’ own data records information of when the client dealt with them, it is of little value if the client traded away. Capturing time stamped public data can provide this insight into why a quote was traded away, meaning that combining both data sets can help firms to analyse missed trades and refine their client pricing if required. 

But further than this, there is also an opportunity for smaller firms andacademic institutions who have struggled to gain access to the right data previously. With a low-cost analytics offering, they have the ability to better understand the data which could lead to improved financial modelling and a more efficient market for all.

But this is still a nascent sector

Although there are various FinTech providers emerging with potential solutions, this is still a nascent sector and 2022 will see the market begin to realise the potential it offers. As with all sectors that start to grow, there are diverse offerings that target different parts of the market.

At Propellant, we deliver a data analytics SaaS solution that aggregates, normalises, and standardises publicly available data, and allows it to be enriched with proprietary and external data. Clients can then perform a range of analytics based on this enriched dataset.

The combination of public and private data will be key to firms improving their trading performance, as well as benefiting academic institution and trading firms.We believe that wide range adoption of this type of analytics could unlock value for not just the institutional market, but other parts of the trading ecosystem – making a better informed and more transparent market for all.