November 30, 2009

Inside Market Data - Special Report

Report: Bloomberg Gains as Spend Falls

The financial industry will spend $22.7 billion worldwide on market data and related services this year, a decline of 1.5 percent from $23 billion in 2008, primarily as a result of budget and staff cuts at end-user firms that have led to reductions in data terminals, according to research released this week by Burton-Taylor International Consulting LLC.

Spend in the Americas has been hit hardest by the reductions, with a 4.9 percent decrease, compared to flat growth in Europe, the Middle East and Africa, mitigated somewhat by Asia, where spend has increased in almost every country throughout the region, rising by 6.5 percent this year overall and reflecting the maturation of Asian markets, says Douglas B Taylor, managing partner at Burton-Taylor.

Another area bucking the overall trend with an upswing in spend is commodities and energy data, mostly resulting from demand for commodities data in Asia and as a result of volatile prices in energy markets, with vendors averaging revenue growth in the mid-teen percentage range for that market segment, Taylor says.

Budget cuts have hit spend on desktop data services by broker-dealers’ equities sales and trading groups and retail wealth managers the hardest, while investment managers have increased their expenditure on data as new regulatory requirements drive sales of pricing and reference data, and in response to the low-latency data needs of automated trading, he says.

Of the leading data vendors, Taylor projects that Thomson Reuters global market share will fall from 34 percent in 2008 to 33.2 percent in 2009, with contraction in the Americas and EMEA, and flat growth in Asia, while Bloomberg’s share is expected to grow from 24 percent in 2008 to 27.9 percent in 2009, with flat growth in the Americas and EMEA and increases in Asia driving a 2 percent growth in overall revenue at the vendor.  Excluding revenues derived from other business lines, such as trading systems, Burton-Taylor calculates market share for Thomson Reuters and Bloomberg at 29.4 percent and 29.2 percent, respectively.

According to the report, Bloomberg will increase its market share in the Americas from 26.3 percent in 2008 to 27.6 percent in 2009, surpassing Thomson Reuters, whose Americas market share is projected to contract from 28.8 percent in 2008 to 26.6 percent in 2009.  Though both vendors were affected by desktop reductions and budget cuts in the Americas, price increases and datafeed sales were sufficient to offset the revenue drop at Bloomberg to provide an estimated $6.32 billion in revenue in 2009, enabling the vendor to gain market share on Thomson Reuters, which is expected to post 2009 revenues of $7.54 billion, Taylor says.

Meanwhile, Interactive Data emerged as the fastest-growing provider in Asia in 2009, while FactSet Research Systems saw the largest growth overall among data vendors with a projected 5.1 percent revenue increase to $620.9 million in 2009, with a compound annual growth rate of 16.5 percent over the past four years.  In fact, FactSet and Standard & Poor’s subsidiary Capital IQ are the only financial information providers with both positive growth and at least $100 million in revenue across the Americas, EMEA and Asia in 2009, Taylor says.

by Vicki Chan