I am the responsible Dad of a family of four including two teenagers. We each own iPhones and, believe it or not, sometimes enjoy the same music, movies, and books. However, we all independently purchase that digital content in our own Apple accounts without much regard to the possibility that another member of the family may have already bought the same exact thing. At the end of the month I am the one trying to reconcile these purchases and seeing the redundant purchases of the same digital content drives me crazy.

The same parallels can be made for the duplicate consumption of market data, and the madness and challenges of being a market data manager tasked with reducing your company’s market data costs, reconciling data vendor invoices and managing data users that can sometimes act like teenagers.

Unfortunately, it is common at large banks to have users daily requesting thousands of securities that often time overlap with the same security requests being made from other departments. But instead of costing several dollars a month, like your teenagers’ duplicate downloads, these duplicate data requests can cost millions if your company subscribes to that data from vendors that charge based on a per request or transaction basis.

For example, if a user from the Risk department requests 10,000 securities each day and you are paying $1.50 per security request, and a user in the Wealth department requests 2000 of the same securities, then you are paying twice, or an extra $3000 per day ($1.50 x 2000) for that same data. Now if those two users are doing that every day of the year, that adds up to close to $800,000 annually - and that is just two users in two departments!

Introducing Xignite’s Optimization Microservice

How can a large bank stop the hemorrhage of market data costs? In the simplest of terms, you need optimization. Optimization lets you pay for data once as opposed to paying for it multiple times. Xignite’s Optimization Microservice lets you achieve just that by enabling the caching of large data sets which can reduce what you spend on multiple requests of the same data fields.

Xignite’s Optimization Microservices is a cloud-native market data management service built to transform how firms store, distribute, manage, and control market and financial data in the cloud. The Optimization Microservices runs on Xignite’s battle-tested cloud-based architecture that currently supports more than 250 different data sources and 12 billion API calls per day for over 750 fintech and financial services clients. Now we are allowing financial institutions to leverage the same cloud technology we have been refining and scaling for more than 10 years to move their own financial and market data to the cloud. Xignite’s Optimization Microservice is data vendor-agnostic and can bring transformative results to any data set a firm may license or collect from vendors such FactSet, SIX Financial, Vela Trading, QuantHouse and many others, as well as in-house proprietary data.

How It Works

In our Optimization Microservice all data requests are passed through the caching mechanism of the microservice, so the first request is stored, and the fulfillment of the second request comes directly from the cache, thus your firm is only charged once. Each user, if entitled for access, can leverage the shared data. If the data is considered fresh by the user/firm based on highly configurable caching rules, any subsequent requests will be sourced from the cache, thus minimizing direct and costly data requests from the data vendor.

Interactive Model of Steps 1-6 of the Caching Flow

The Bank of Montreal (BMO) estimated prior to implementing Xignite’s Optimization Microservice that 85-95% of the same data requests were being made by multiple users within the company.  Although multi-requests are less expensive than initial requests, they were able to achieve significant cost savings by eliminating all duplicate requests. 

Bringing this back to my family analogy, Apple solves these duplicate purchases of the same digital content with Family Sharing. Now my family only needs to purchase movies, books, and music once, instead of multiple times. Once the music/book/movie has been purchased and stored in the cloud the fulfillment of the request is even faster.

Xignite’s Optimization Microservice is basically “Family Sharing” of your licensed market data. You purchase one copy of the data and any subsequent requests are accessed from the cloud and latency is reduced due to the data already being stored in the cache.

In the sample Optimization Latency Report below you can see a real life example of how the second request where 13.5K of data points (The request was for approximately 1350 securities across 10 fields) was fulfilled from the cache only took 22 seconds shown highlighted in yellow below.

Bottom line, if you are a responsible dad like me I would highly recommend Apple's Family Sharing, and if you are responsible for your firm’s market data spend and for reducing it, you need optimization. I would recommend you investigate Xignite’s Enterprise Optimization Microservice.