Exchanges and the Future of Market Data
Capital markets are among both the biggest producers and consumers of data across all global industries. In the fast-paced world of financial markets, exchanges are the hubs through which much of the data flows.
Market participants across the spectrum from asset managers to electronic liquidity providers rely on exchange market data to inform their trading strategies, meet regulatory requirements and gain a competitive edge. Access to timely and accurate data is essential for everything from executing trades to optimizing strategies and managing risk.
To meet this need, exchanges have developed a range of services to analyze, aggregate and market their data.
We first examined how exchanges are investing in and building new data services at our TT Connect: Unlocking Profit with Data & Analytics event last September. With 2025 now underway, we took another look at how exchanges are evolving their offerings to address this ever-growing demand for data.
Data Equals Dollars (or Euros, Yen, Pounds, etc.)
Data is big business for global exchanges. Elena Patimova, Director of Derivatives Sales at Cboe Global Markets, says: “Data is the new oil, it is very valuable. At Cboe, we are focusing on how we can package the data so that market participants can use it in a more efficient way.”
Patimova points to Cboe’s Trade Alert service as an example. Trade Alert pulls data from 18 different markets, 5,800 different instruments, 6 million trades and 150 billion updates related to the U.S. equity and derivatives markets. The system removes all the noise and provides the user with contextual alerts for significant trades and market activity.
“We are focused on the tools we can provide on a democratized basis so that our clients can make more informed decisions when they trade our markets,” she says.
Historically, the data provided by exchanges was only used on a granular or sophisticated level by the most advanced hedge funds, proprietary trading houses and banks. This is now changing as more and more firms start to use data to backtest strategies and develop new and innovative approaches to the market. Regulatory requirements, such as best execution and transaction cost analysis (TCA), are also driving demand for data.
While some in the market have criticized exchanges for the increased data fees that have been levied over the past decade, this criticism often underestimates the time, costs and effort that exchanges face in order to clean and package the data to add value to clients.
Exchanges have vast amounts of data, and finding the value and addressing the problems they are trying to solve within that data is a complex and costly process. Additional costs come with storing the data and providing the tools that allow clients to query and interrogate the data.
Magnus Almqvist, Acting CEO at Exberry, says: “There is a lot of creativity among exchanges in the market today in terms of how they package and analyze data and provide data analytics tools to their customers.”
The Cloud, TCA and Multi-asset Expansion
The move to cloud hosting by major exchange groups has exponentially increased the ability of exchanges to offer advanced data solutions to clients. Cloud services offer scalable, secure and cost-effective storage solutions for data, making it easy to archive and retrieve as needed.
With cloud platforms, exchanges can run large-scale analytics on stored data to identify trends, optimize pricing models, or provide data to clients covering a range of functions from capital and margin optimization to trade execution signals and TCA services.
TCA is one area where data from exchanges is feeding a significant evolution in the complexity of how firms use the metric. TCA is moving to a pre-trade function and incorporating more asset classes. In addition, firms are looking to embed a wider range of costs, from market data to the cost of capital, to their calculations.
In the wake of post-crisis regulatory change, the cost of capital has become an essential consideration for firms evaluating the overall cost of trading. Today, market participants are looking to move trading onto exchanges from the over-the-counter (OTC) markets where possible to reduce OTC exposures in the wake of the Uncleared Margin Rules (UMR). Making the decisions on where to move exposures requires significant data analysis across a wide range of metrics, both within one market and across exchanges and instruments.
At the same time, exchanges have also expanded across venues with acquisitions of foreign exchange (FX) platforms and OTC venues. This enables exchanges to provide clients with a greater range of options on where and what to trade within the same organization.
Many exchanges have combined these acquisitions with investment in aggregators and execution tools to ease trading between venues. As a result, data tools that provide insights on where to trade within an exchange group are growing in popularity.
Looking to the Future
As financial markets become more sophisticated, the demand for faster and deeper sets of market data continues to grow. Exchanges are investing heavily in infrastructure to deliver ultra-low-latency data feeds, catering to the needs of high-frequency traders and algorithmic strategies that require split-second decisions.
But speed is only one element of the exchange market data evolution. As use cases proliferate, exchanges are constantly investing in tools and packages to provide clients with bespoke data sets and data analysis.
We have seen how exchanges are adapting their data services to meet demand and reflect the evolution of financial markets. The next wave of innovation in market data will continue to be built around customized data sets and advanced analytics. This shift will ultimately transform how firms consume market data, empowering them to identify trends, optimize execution and increase the sophistication of their trading strategies.